Cryptocurrencies sharply reversed early gains during the U.S. trading session on Wednesday with bitcoin {{BTC}} dipping below $64,000 as a broad-market equity sell-off weighed on the digital asset market.
The leading cryptocurrency by market cap sold off 2% within an hour, dropping to as low as $63,890 after trading above $66,000 earlier in the session. At publishing time, BTC was trading at $64,000, down 0.5% over the past 24 hours.
Altcoin majors such as solana {{SOL}}, cardano {{ADA}} and Chainlink's token {{LINK}} sold off 2%-4% over the same time frame. The broad-market crypto benchmark CoinDesk 20 Index (CD20) was down 1.2% over the past 24 hours, with most constituents in the red.
The action happened while key U.S. equity indexes also sold off, with tech-heavy Nasdaq plunging 2.7% and the S&P 500 falling 1.3%. Tech megacap stocks such as chipmaker Nvidia (NVDA), which were the biggest contributors of the two benchmarks march to new all-time highs, have been struggling in the past few days as investors rotated capital to smaller cap stocks in anticipation of more accommodating interest rates later this year. Nvidia was lower by 6.5% on Wednesday, though still higher by 145% year-to-date.
Read more: Rotation Out of Mega-Cap U.S. Stocks Could Provide Tailwind for Cryptocurrencies, Marex Solutions Says
Joel Kruger, market strategist at LMAX Group, said that the crypto rally might stall if the stock market selloff turns into a deeper correction, but over a longer time frame may provide a haven for investors fleeing stocks.
"The one concern we’ve been flagging in recent sessions is our concern about the state of the U.S. equities market and the possibility we could soon see a major bearish reversal to allow for a healthy correction," Kruger said in a Wednesday note.
"But even in such a case, there will be plenty of reason to be wanting to buy bitcoin as a flight to safety asset, and plenty of reason to be wanting to pick up other crypto assets into dips on their potential for massive innovation," he added.
