The cryptocurrency market showed signs of recovery on Tuesday, with Bitcoin trading above $61,000 after hitting a low of $58,580 the previous day. Despite this bounce back, Bitcoin is still down almost 10% for the month, while the Nasdaq index has seen a 5% gain. This contrasting performance has led some analysts to suggest that a decrease in market liquidity could be on the horizon, which may have a negative impact on the Nasdaq.
Michael Kramer, founder of Mott Capital Management, pointed out that if Bitcoin is used as a gauge for market liquidity, then a decrease in Bitcoin’s value could signal a similar trend for the Nasdaq index. This could also affect companies like Nvidia, which have historically followed Bitcoin’s performance closely.
In other news, traders on the decentralized predictions platform Polymarket have predicted that Donald Trump will win the 2024 U.S. Presidential Elections with a 57% chance, compared to 35% for Joe Biden. Trump’s favorable stance on cryptocurrency has led some to believe that investing in Bitcoin and other cryptocurrencies could be a bet on his potential presidency.
Additionally, analysts at Bernstein have suggested that the upcoming U.S.-based spot ether ETFs may see less demand compared to Bitcoin ETFs due to the absence of an ETH staking feature. However, they believe that the basis trade will attract investors over time, contributing to healthy liquidity in the ETF market. With spot ether ETFs on the horizon, investors are anticipating higher price volatility in Ethereum compared to Bitcoin.
On the futures trading front, the notional open interest in Bitcoin futures on centralized exchanges has decreased by 14% since June 7, signaling a decline in carry/basis trades due to negative funding rates. This data comes from analysts at Bitfinex, highlighting the impact of market conditions on trading strategies.
Overall, the cryptocurrency market continues to show resilience despite recent fluctuations. As investors navigate these changes, staying informed about market trends and developments will be crucial for making informed decisions in the crypto space.