According to Blockworks, Bitcoin has recovered losses from earlier in the week, while stocks struggled to maintain their fourth quarter momentum. Analysts attribute this to uncertainty from the Federal Reserve on the pace of rate cuts in 2024 and optimism about the timeline for approval of a bitcoin exchange-traded fund (ETF). Bitcoin was trading 1.5% higher over the past 24 hours Thursday morning, rebounding from the decline that saw the cryptocurrency drop as much as 8% Wednesday. Ether was also back in the green, gaining about 2% Thursday.
The Nasdaq Composite headed for its fifth straight day of losses Thursday at the start of the trading session, while the S&P 500 traded sideways. The Nasdaq Composite is now down 2.3% since the start of the year, and the S&P 500 has lost 0.8%. The Dow Jones Industrial Average is faring slightly better, gaining 0.3% Thursday morning and positioning it flat since the first trading day of 2024.
Analysts attribute the decline to hesitation from the Fed about how many rate cuts might come in 2024 and when they could start, as demonstrated by the December Federal Open Market Committee minutes released Wednesday. Committee members signaled that three cuts could happen this year, but they remain uncertain and will determine next steps based on how the economy evolves. Fed Funds Futures still call for six 25 basis point cuts in 2024 starting in March, according to data from CME Group.
Bitcoin's Wednesday decline coincided with a report from financial services firm Matrixport, which questioned the likelihood of an ETF getting the green light this month. Matrixport analysts said the US Securities and Exchange Commission decision-makers, which are dominated by Democrats, would not vote in favor of a spot bitcoin product. Bloomberg Intelligence ETF analysts Eric Balchunas and James Seyffart are still calling for a 90% likelihood of the SEC approving spot bitcoin ETFs before Jan. 10.
