It’s a relatively rare phenomenon: While the stock market continues to see record gains (the S&P 500 is up more than 16% this year), Bitcoin and other cryptocurrencies continue to struggle, making this the first time the crypto and stock markets have split since 2014, Bloomberg reported.
This split, with Bitcoin falling while stock markets soar, is somewhat unusual. As of midday Friday, at the time of writing, the digital cryptocurrency (BTC) was trading down more than 4%, hovering around $88,945, well below its all-time high of over $125,000, but still above a recent low of $85,000 (down almost 30% from the high).
Here’s what you need to know.
Why is the division between cryptocurrency markets and stock markets unusual?
Although Bitcoin is known for its volatility, historically the digital currency and stocks have traditionally risen and fallen together.
So why has there been a sell-off in cryptocurrencies? What is contributing to the decline in investor confidence?
Part of what boosted confidence in the coin was the Trump administration’s early adoption of crypto, paving the way for crypto-friendly regulations.
However, as Fast business As previously reported, a few different micro and macroeconomic factors have started to scare investors away from the more volatile digital currency.
These factors include higher inflation, changing interest rates, muted enthusiasm for AI stocks due to fears of an AI bubble, and growing concerns about the widening gap between low-income and wealthy Americans in what is shaping up to be a “K-shaped economy.”
Remind me, what exactly is Bitcoin, anyway?
Bitcoin is a type of cryptocurrency. Unlike a standard currency, such as the U.S. dollar or the European Union euro, it exists only in digital form and operates without government or banking oversight, and is exchanged peer-to-peer, making it harder to trace. Instead, Bitcoin uses a decentralized blockchain ledger to securely verify and record transactions.
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