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Bitcoin May Drop Below $50,000 If Major Seven Stocks Experience Additional $500 Billion Decline
Bitcoin may experience additional downward pressure if the Magnificent Seven stocks in the United States continue to decline in value.
The “Magnificent Seven” stocks have undergone a significant drop, posing a risk of further downward pressure on Bitcoin’s price.
Magnificent Seven refers to a group of leading tech stocks, including Nvidia and Microsoft, which collectively lost over $650 billion in market capitalization during regular trading on August 5.
Although there has been a minor recovery since then, another potential downturn in these top tech stocks could result in lower Bitcoin (BTC) prices, as noted by Akshay Nassa, the founder of Chimp exchange.
Nassa stated:
“The relationship between stock market performance and cryptocurrency values is well-established; as major tech stocks decline, investor sentiment typically shifts away from alternative assets, including Bitcoin.”
The connection between Bitcoin and tech stocks has become increasingly significant, as the tech-heavy Nasdaq has entered a notable correction, which could impact the crypto market, according to Nassa.
Could Bitcoin Dip Below $50,000 As Tech Stocks Struggle?
While stocks are generally more robust against market volatility, another drop in the Magnificent Seven could negatively affect Bitcoin’s price, according to Alvin Kan, the COO of Bitget Wallet.
Kan remarked,
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“If the Magnificent Seven, which includes Amazon and Apple, are declining, investors may seek some form of protection from riskier assets like Bitcoin. This suggests that significant capital flight in the broader financial market can also impact Bitcoin’s price.”
Pressure from tech stocks, combined with other crypto-specific factors, could potentially pose a risk of another dip below the $50,000 threshold, Kan explained:
“The ongoing market downturn, reflecting a 32.32% decrease from Bitcoin’s previous All-Time High, has reignited speculation about a further drop to $40,000… However, Bitcoin’s price is not falling in isolation.”
Additional elements affecting Bitcoin and crypto prices include the recent interest rate cut by the Bank of Japan, as well as “aggressive” ETH selling from market makers such as Jump Trading, Kan added.
The Macro Bitcoin Bottom Is In, According To Analyst
The local Bitcoin bottom may have been reached, according to historical chart patterns on the monthly chart, as analyzed by pseudonymous crypto analyst Rekt Capital.
The analyst posted on X on August 6:
“We are here (orange circle)”
#BTC
We are here (orange circle)$BTC #Crypto #Bitcoin pic.twitter.com/U0qNnBEMb2
— Rekt Capital (@rektcapital) August 6, 2024
However, the magnitude of the current correction will largely depend on the inflows from US spot Bitcoin exchange-traded funds (ETFs).
The US Bitcoin ETFs have experienced three consecutive days of net outflows, totaling over $148 million in cumulative outflows on August 6, according to data from Farside Investors.
ETF inflows can play a crucial role in a cryptocurrency’s price appreciation. For Bitcoin, ETFs accounted for approximately 75% of new investment in the leading cryptocurrency by February 15, as it surpassed the $50,000 mark.
