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(Bloomberg) — Bitcoin’s correlation with stocks continued to diverge, with the original cryptocurrency declining while US equities were mostly flat after a stronger-than-anticipated US jobs report, suggesting investor confidence has yet to recover from this year’s crash in digital asset prices.
The largest cryptocurrency dropped below $67,000, before paring the decline during New York trading on Wednesday. Ether, the second-biggest coin, fell as much as 5.3% to an intraday low of $1,902.
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“Bitcoin has fallen below $67,000, recording its third daily bearish candle,” Alex Kuptsikevich, chief market analyst at FxPro Group, said in a note. “Of the more than 20% rebound from Friday’s lows, only slightly more than half remains.”
On Friday, the original digital currency surged the most in almost three years, recouping almost all of the losses registered during Thursday’s crypto market meltdown that had dragged the token down more than 50% from its October peak.
“We suspect last week’s $60,000 low, created on massive volumes, is a capitulation type low, a clear catalyst for a sustained rebound remains elusive,” said Tony Sycamore, an analyst, IG Australia.
The January jobs data reinforces Federal Reserve officials’ inclination to keep interest rates on hold for now, with traders pushing out their timeline for the next rate cut to July from June. Rate cuts have been historically viewed as positive catalyst for Bitcoin since they generally increase demand for higher returning riskier assets.
“The acceleration of price decline to $60,000 without corresponding volume spikes suggests thin order books and lack of buyer conviction at intermediate levels,” Kaiko analyst Laurens Fraussen wrote in a note. “This creates vulnerability to further downside on modest selling pressure.”
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