Bitcoin could see more downward pressure if the Magnificent Seven stocks in the US continue to shed value.
The “Magnificent Seven” stocks have seen a sharp decline, threatening to bring more downward pressure on Bitcoin price.
Magnificent Seven, a moniker for some of the top-performing tech stocks like Nvidia and Microsoft, lost over $650 billion in cumulative market capitalization during regular trading on Aug. 5.
Despite staging a slight recovery since, another potential decline in the top tech stocks could lead to lower Bitcoin (BTC) prices, according to Akshay Nassa, the founder of Chimp exchange.
Nassa said,:
“The correlation between stock market performance and cryptocurrency values is well-documented; as major tech stocks falter, investor sentiment generally shifts away from alternative assets, including Bitcoin.”
The correlation between Bitcoin and tech stocks gained even more importance, as the tech-heavy Nasdaq has entered a significant correction, which could spill over into the crypto space, according to Nassa.
Could Bitcoin Dip Below $50,000 As Tech Stocks Struggle?
While stocks are generally more resilient to market volatility, another decline in the Magnificent Seven could hurt Bitcoin price, according to Alvin Kan, the COO of Bitget Wallet.
Kan said,
“If the Magnificent Seven, including Amazon and Apple, are falling, investors would want some form of insulation from even more risky assets like Bitcoin. This means that the extreme capital flight in the broader financial market can also weigh in on Bitcoin price.”
Pressure from tech stocks, along with other crypto-specific catalysts, could potentially threaten another dip below the $50,000 mark, explained Kan:
“The ongoing market slump, accounting for a 32.32% drop from the former All-Time High for Bitcoin, has re-ignited the speculations of a further drop to $40,000… However, the price of Bitcoin is not crashing in isolation.”
Other factors influencing Bitcoin and crypto prices include the Bank of Japan’s latest interest rate cut, along with “aggressive” ETH selling from market makers like Jump Trading, Kan added.
The Macro Bitcoin Bottom Is In, According To Analyst
The local Bitcoin bottom may be in, according to historical chart patterns on the monthly chart, analyzed by pseudonymous crypto analyst Rekt Capital.
The analyst wrote in an Aug. 6 X post:
“We are here (orange circle)”
#BTC
We are here (orange circle)$BTC #Crypto #Bitcoin pic.twitter.com/U0qNnBEMb2
— Rekt Capital (@rektcapital) August 6, 2024
However, the extent of the current correction will mainly depend on the inflows from the US spot Bitcoin exchange-traded funds (ETFs).
The US Bitcoin ETFs have recorded three consecutive days of net outflows, with over $148 million worth of cumulative outflows on Aug. 6, according to Farside Investors data.
ETF inflows can significantly contribute to a cryptocurrency’s price appreciation. For Bitcoin, ETFs had accounted for about 75% of new investment in the world’s largest cryptocurrency by Feb. 15 as it surpassed the $50,000 mark.
