Bitcoin and other cryptocurrencies fell on Friday despite the virtual confirmation of approval for an exchange-traded fund (ETF) that holds physical Ether. Potential delays to the ETF's launch and diminishing hopes for interest rate cuts appear to be hurting the cryptocurrency sector.
Bitcoin
It fell 3.5% in the past 24 hours to $67,382.
ether
Bitcoin, the second-largest cryptocurrency, fell 6.9% to $3,698 after rising more than 20% over the past week.
The U.S. Securities and Exchange Commission approved significant rule changes on Thursday that will allow trading of spot Ethereum ETFs, but companies looking to issue the funds could face multiple back-and-forths with regulators over the course of weeks or months before they get final permission to launch their products.
“Ethereum and crypto enthusiasts are sitting tight and waiting for the SEC to work out the finer details before the Spot ETH ETF actually launches. This lack of a definitive decision is likely the reason we haven't seen a bigger reaction,” said Antoni Trenchev, co-founder of crypto lending firm Nexo.
Markets may be keeping in mind the old Wall Street adage, “buy the rumor, sell the news,” which means assets often rally before big events and sell off afterward. Bitcoin, for example, hit an all-time high of nearly $74,000 in mid-March amid a surge in interest in new spot ETFs, but has since fallen.
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“The current situation is entirely driven by Ethereum, with the ETH token significantly outperforming BTC… As a result, Bitcoin's dominance has fallen below the 55% level and is now just above a major trendline that has acted as support since early 2023,” said Rachel Lin, CEO of trading platform SynFutures.
The sector also appears to be feeling the effects of reduced bets on a cut in U.S. interest rates following this week's economic data. Cryptocurrencies, like other risk assets such as stocks, are sensitive to borrowing costs, as higher interest rates reduce the incentive for investors to buy riskier investments such as stocks and tokens.
Smaller cryptocurrencies are also falling,
Cardano
Decreased by 3.3%,
polygon
A loss of 1.4%.
Dogecoin
It fell 3.8%.
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Email Adam Clark at adam.clark@barrons.com.
