Cryptocurrencies appear to be losing steam, which seems like an interesting change from the enthusiasm of years past, when extra money and enthusiasm drove prices to new heights, according to Wolfe Research.
The report highlights a clear divide between cryptocurrencies and stocks, with stocks outperforming cryptocurrencies since March. Wolfe notes that while it has remained stable in absolute terms, it is stuck in a downtrend, and the easiest path is likely to be a bigger drop.
“There are a number of factors at play, and right now, they all seem to be working against cryptocurrencies. This is a very different context than in previous years, when excess liquidity and over-the-top enthusiasm sent cryptocurrency prices soaring to new highs,” the report added.
While Wolfe Research remains neutral on Bitcoin until a decisive move occurs, it expects range-bound trading to continue until there is a decisive breakout in either direction.
After reaching an all-time high of $73,798 in March, Bitcoin has been on the back foot, with repeated attempts to recover failing. Events that once sparked excitement, such as capital inflows into US Bitcoin ETFs or hopes for future interest rate cuts by the Federal Reserve, now seem to have less impact.
“The price has been swinging and gradually moving lower since peaking in March. There is no firm conviction in either direction, but as trend followers, it is becoming clear to us that the path of least resistance is to the downside,” Wolfe Research analysts explain.
The analysis also highlights the struggles of , which suffered a drop last week, suggesting further declines are likely.
Furthermore, Wolfe Research’s outlook suggests that the cryptocurrency market may face further challenges ahead, with key assets showing signs of weakening momentum.
“Much like AI trading, which we also believe has seen its best days for now, cryptocurrencies seem to have lost steam. We only anticipate this trend to continue as altcoins in general fall to new lows,” the report reads.
