Bitcoin surged past $90,000 this week, cementing its upward trajectory even as Wall Street struggled with growing uncertainty over Federal Reserve policy.
While the cryptocurrency gained momentum, the Dow Jones Industrial Average fell 305.87 points, or 0.70%, closing at 43,444.99. The S&P 500 and Nasdaq Composite followed suit, with losses of 1.32% and 2.24%, respectively, marking a challenging week for U.S. equity markets.
Wall Street slides as the Fed hesitates on interest rates
Investors were left unsettled by the Federal Reserve’s cautious stance on interest rate cuts. Federal Reserve Chair Jerome Powell stated that while the economy remains strong, there is no immediate need to reduce rates. Boston Fed President Susan Collins echoed this sentiment, expressing concerns that a December rate cut is uncertain.
Economic data provided little reassurance. October retail sales increased 0.4%, narrowly beating expectations of 0.3%, but job growth was disappointing. Nonfarm payrolls rose by only 12,000, attributed to labor strikes and weather disruptions, leaving investors worried about slowing momentum. Despite historically low unemployment, the rate has shown signs of creeping upward.
Sectors across Wall Street suffered. Biotech stocks took a significant hit after President-elect Donald Trump selected vaccine skeptic Robert F. Kennedy Jr. to head the Department of Health and Human Services. Tech giants like Nvidia, Microsoft, and Alphabet also posted significant losses, dragging the Nasdaq further down. However, Tesla managed to buck the trend with a 3% rise, buoyed by optimism surrounding Trump’s economic policies.
Bitcoin powers through as adoption grows
While equities slumped, Bitcoin experienced a 16% weekly gain, pushing its price above $90,000. Analysts see this as a sign of the cryptocurrency’s growing role as a hedge against traditional market instability. Bitcoin’s appeal as a “non-confiscatable asset” has drawn comparisons to gold, with Dhaval Joshi of BCA Research forecasting that its value could surpass $200,000 in the long term.
The current rally has been driven by rising adoption and Bitcoin’s perceived independence from traditional financial systems. With its market capitalization at $1.5 trillion, Bitcoin still occupies a relatively small share of the total market for non-confiscatable assets, leaving significant room for growth.
The correlation between Bitcoin and stocks weakens
After months of heightened correlation, Bitcoin’s connection to traditional markets appears to loosen. Earlier this year, the cryptocurrency’s performance often mirrored stock movements, particularly during periods of heightened uncertainty. However, Bitcoin’s latest rally suggests a return to its status as an asset distinct from equities, offering investors an alternative amid economic and market turbulence.
As Wall Street grapples with volatility, Bitcoin’s continued rise underscores its growing appeal as a resilient store of value. Investors are watching closely as the cryptocurrency edges to the $100,000 mark, with many speculating that the best may still be ahead.
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