Crypto slips while stocks post a mild recovery after a rough start to 2024

Bitcoin and ether slipped Friday, losing 1.5% and 1.7%, respectively, after a tumultuous week in crypto markets. Meanwhile, stocks, after a rocky start to 2024, started to turn things around, but indexes are still on track to post their first losing week in more than two months.

The S&P 500 and Nasdaq Composite indexes each gained around 0.3% toward the end of Friday’s trading session, positioning them 1% and 2.4% lower, respectively, since the beginning of the year.

Investors have been digesting this week’s jobs data and the latest indication from the Federal Reserve that the pace and timeline for rate cuts is still very much up in the air. The ratio of job openings to unemployed workers remained at 1.4x in November versus the average of 0.7x since December 2000, according to data from the Bureau of Labor Statistics released Wednesday.

“Whether it was just exuberant festive cheer or something more, investors bounced into the end of 2023 full of hope that not only is the tightening cycle behind us, but 2024 will be the year of the soft landing and more rate cuts than you can count on one hand,” Craig Erlam, senior market analyst at Oanda, said of the late 2023 rally in stocks.

“That may be proven to be correct, perhaps even not bullish enough, but it was going to be tough to sustain that positioning and build upon it early in the new year,” Erlam added. “We effectively needed all of the economic indicators to fall kindly from the off which was a big ask.”

Newsletter

Subscribe to Blockworks Daily

Bitcoin (BTC) on Friday hovered under $44,000, erasing the mild recovery from Thursday that saw the crypto bounce as much as 4% to trade at around $44,500.

Ether (ETH) similarly declined Friday, losing 1.5% and dipping to trade 2% lower since the start of 2024. Bitcoin remains up 2.7% year-to-date.

On Wednesday, bitcoin slipped 8% in a matter of hours, spurred, analysts say, by skepticism that a bitcoin spot exchange-traded fund will make it past the SEC this month.

Researchers from financial services platform Matrixport predicted Wednesday morning that the “dominated by Democrats” SEC voting group would follow chair Gary Genseler’s lead and elect not to embrace crypto. Traders seemed to sell on the news, but bitcoin was back around $44,500 by Thursday.

Two issuers on Thursday indicated that their respective exchanges had approved their ETF listing, pending SEC approval, another step in the right direction, ETF analysts say.

Grayscale, which plans to list on NYSE Arca if and when the SEC approves the product, and VanEck, which could debut on Cboe, on Thursday filed their 8-a forms, a requirement before securities are listed.

The SEC has until Jan. 10 to approve or deny Ark and 21Share’s bitcoin ETF application. It’s a deadline traders and analysts have been keeping a close eye on, but the following weeks could see a return of macroeconomic-driven market moves for bitcoin, Noelle Acheson, author of the ‘Crypto is Macro Now’ newsletter, said.

“Macro matters are not the driver of bitcoin narratives at the moment. Will that change?” Acheson said. “Perhaps, especially if we see a ‘sell-the-news’ correction after the BTC spot ETFs are approved. Bitcoin is and probably always will be influenced by monetary liquidity and overall investor sentiment.”

Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.