Cryptocurrencies experienced a widespread rise on Tuesday, contrasting with the performance of the stock market. This surge came after Moody’s, the ratings agency, placed the U.S. banking sector under watch. Bitcoin, the leading cryptocurrency, saw a 2.89% increase in value, reaching $29,785.88, according to Coin Metrics. Interestingly, Bitcoin had remained relatively stable for 14 consecutive days, fluctuating less than 1% in either direction. It is worth noting that the crypto market operates 24/7.
The positive movement in cryptocurrencies can be attributed to Moody’s decision to downgrade ratings for 10 U.S. banks and put others, including Bank of New York Mellon, U.S. Bancorp, State Street, and Northern Trust, on notice for potential downgrades.
To further illustrate the market context, a chart depicting Bitcoin’s performance over the past month is provided below:
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Bitcoin in past month
In the earlier months of this year, the crisis faced by U.S. banks prompted a significant rally in bitcoin. Investors began to rediscover the appeal of the cryptocurrency network as an alternative to traditional banking systems. Notably, volatility in bitcoin and ether trading declined significantly in May, following the resolution of the banking crisis. This decline in volatility has persisted, reaching multi-year lows, as reported by Kaiko.
The sentiment of Tuesday’s news aligns with the aforementioned trend. Greg Magadini, the director of derivatives at Amberdata, believes that Bitcoin remains resilient. He notes that the correlation between the stock market and bitcoin is weakening, as the cryptocurrency has shown resilience during times of banking turmoil.
Although major stock market indices experienced declines, equities related to cryptocurrencies saw gains. Coinbase, a prominent crypto exchange, witnessed a 2.42% increase, while Microstrategy, a company with significant exposure to bitcoin, experienced a 5.03% rise in its stock value. Additionally, several mining stocks saw gains of 4% or more.
The upward movement of bitcoin also had a positive impact on the broader crypto market. Ether, the second-largest cryptocurrency, increased by 2.10%, and other Ethereum alternatives, including Solana and Polygon, experienced gains of 7.48% and 4.96%, respectively. The token for the decentralized finance platform Uniswap also saw a rise of 4.30%. XRP, a payments token, climbed by over 3.49%.
In conclusion, cryptocurrencies displayed significant gains on Tuesday, driven by Moody’s cautionary actions towards the U.S. banking sector. This surge in value highlights the decoupling of bitcoin from traditional stock market trends and its resilience during times of banking turmoil.
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