Dow Jones, Bitcoin Price Rallies in Jeopardy as US Stock Market Sends Mixed Signals
The US stock market is taking an uneven path on Thursday morning, with the Dow suffering triple-digit declines while tech stocks rise. The cryptocurrency market is almost universally sour, however, as traders continue to wrestle with that is now the longest-ever bear market for the bitcoin price.
Dow Risks Fall Back Below 25,000
The Dow Jones Industrial Average (blue), S&P 500 (red), and Nasdaq (orange) have all made strong gains this week.
The Dow had stomped to a monster 435 point gain on Wednesday as the stock market rode the wave of continued Federal Reserve patience on interest rate hikes, as well as positive earnings reports from major firms including Apple and Boeing.
The US stock market is sending mixed signals on Thursday, with Dow (blue), S&P 500 (red), and Nasdaq (orange) futures taking divergent paths.
That bullish sentiment did not carry over into pre-market trading on Thursday, however. US stock market futures signaled a mixed open, with the Nasdaq and S&P 500 inching toward minor gains but the Dow at risk of a triple-digit drop.
The Dow Jones Industrial average opened to losses of 109.12 points or 0.44 percent, as of 9:31 am ET. Unless the Dow turns a corner later in the day, it could close below 25,000 just one day after eclipsing that mark for the first time in almost two months.
The S&P 500 rose by 0.04 percent, while the tech-heavy Nasdaq outperformed thanks to a strong earnings report from Facebook, which CEO Mark Zuckerberg says has “started to turn a corner” following recent struggles. The Nasdaq had gained 0.46 percent as of the time of writing.
Strong Dow Emboldening Trump in US-China Trade War Negotiations?
On Thursday, the US-China trade war again took center stage in stock market analysis.
CCN has previously reported that Trump evaluates his policies based on the direction of the stock market, and Thursday’s mixed open aside, those returns have been quite positive thus far in 2019.
Bolstered by a patient Federal Reserve and a relatively-strong Dow, some analysts wonder whether Trump will feel empowered to take a hardline stance on US-China trade war negotiations.
with the Fed having delivered unto Trump what is Trump’s, and the Dow over 25,000, does he really need that easy deal, or can he let his team push back harder? – Rabo
— zerohedge (@zerohedge) January 31, 2019
This morning, Trump said that the two countries have made progress toward striking a new deal but that they still need to address several “difficult points” that have caused “long standing” tensions. For that reason, he said that he won’t sign a trade agreement until he personally meets with Chinese President Xi Jinping. That meeting could reportedly take place toward the end of February, just days before the March 1 deadline that would kick the trade war back into full gear.
Amazon to Report Earnings after the Closing Bell
Aside from continued developments in the trade war, analysts continue to monitor what has turned out to be a fairly positive earnings season for US companies. Tech behemoth Amazon will report its quarterly results following Thursday’s closing bell, which will likely set the tone for the stock market’s last weekly trading session on Friday.
Bitcoin Price Continues to Flirt with Dangerous Level
Cryptocurrency prices are mostly negative heading into the US trading session, with the overall crypto market cap down $2.8 billion from Wednesday’s intraday peak.
The bitcoin price, as CCN reported, is now officially in its longest bear market in its decade-long history, and analysts continue to debate how much longer this trend will persist.
The bitcoin price continues to trade below $3,500, which some analysts warn could portent near-term losses.
According to some chart-watchers, if bitcoin can make a solid recovery above $3,500 and begin to press toward $4,000, it could mean that the bear market has run its course.
However, bitcoin has not proven that it has the momentum to make any such sustained recovery, and consensus among many analysts is that it will test $3,000 — and perhaps fall as low as $2,000 — before finally turning a corner.
Fidelity to the Rescue?
Fidelity could help institutional investors make a splash in the crypto market. | Source: Shutterstock
One interesting wrinkle in this outlook is what role, if any, Fidelity’s soon-to-launch institutional cryptocurrency custody service will play in altering market sentiment and media narratives surrounding bitcoin.
If, as reported, Fidelity Digital Assets opens for business in March, then heretofore sidelined institutional capital could begin to flow into cryptocurrency right as the bitcoin price is already close to establishing a firm bottom.
Presumably, Bakkt — the cryptocurrency exchange developed by stock market titan Intercontinental Exchange (ICE) — will finally win regulatory approval to launch its physically-settled bitcoin futures product around the same time. That product had originally been scheduled to launch in December but had been delayed multiple times and currently has no specific release date.
The entry of Fidelity and Bakkt into the previously retail-focused cryptocurrency sector could provide a potent one-two punch toward attracting institutional capital into the battered crypto market.
Altcoins Trade Down
As of the time of writing, the bitcoin price stood at $3,418, which represented a 24-hour decline of 0.47 percent.
The ripple price (XRP) experienced a 1.56 percent drawdown but retained most of the gains it had made following yesterday’s SWIFT-R3 partnership announcement.
Movements were more pronounced further down the charts, with the tron price declining 5.44 percent, the stellar price dropping 3.44 percent, and bitcoin sv falling by 4.26 percent. EOS was the only large-cap cryptocurrency to trade in the green, rising 0.15 percent against the dollar.
Featured Image from Shutterstock. Price Charts from TradingView.