U.S. Stocks Rebound as Tech, Energy Stem Losses; Cryptocurrencies Search for Lifeline
U.S. stocks rose on Wednesday, clawing back from a devastating two-day collapse that pushed the major indexes in to negative territory for the year. Cryptocurrencies traded mostly lower over the 24-hour cycle as bitcoin cash and Stellar saw their market caps converge.
Two of three major indexes reported gains Wednesday, with the large-cap S&P 500 Index rising 0.3% to 2,649.93. Energy, communication services and technology led seven of 11 primary sectors higher.
A strong performance in information technology propelled the Nasdaq Composite Index higher. The tech-driven gauge closed up 0.9% at 6,972.25.
The Dow Jones Industrial Average pared its gains in the final moments of trading to close flat at 24,464.69. Dow industrials were up more than 200 points earlier in the session.
On Tuesday, both the S&P 500 and Dow slide into negative territory for the year while the Nasdaq closed at its lowest level since April.
Crypto Markets Sputter
After a week of devastating losses, crypto prices traded within a more predictable range Wednesday, as bitcoin rebounded from 13-month lows and leading altcoins showed signs of stabilizing. However, there was little upside to report as market observers kept a close watch of the bitcoin cash hash war.
The cryptocurrency market cap reached a session high of $152.7 billion before reversing course back down to $147.3 billion, according to the latest available figures. Trade volumes have also dropped in the last 24 hours, though open positions on bitcoin futures contracts suggest a large number of short positions are still active.
Bitcoin’s price consolidated below $4,500 after breaching the $4,300-mark early Tuesday. The leading digital currency has lost a third of its market cap in the last seven days.
XRP managed to recover after falling sharply overnight. Astonishingly, the so-called banker’s cryptocurrency has lost only 5% over the past seven days. XRP was last seen trading at $0.4382, down 0.6% on the day.
Bitcoin cash continued to struggle midweek as its market cap remained anchored to $4 billion, setting the stage for a “flippening” with Stellar Lumens, which is currently valued at $3.8 billion.
Bulls Maintain Their Composure
Several prominent voices from within the crypto community are telling investors to remain calm amid the recent skid, arguing that aggressive downturns are nothing new for the digital asset class. John McAfee told followers on Twitter not to panic because we are in a protracted bear market that will eventually reverse course.
Crypto venture capitalist Lou Kerner told CNBC Wednesday that bitcoin’s price collapse mirrors that of Amazon during the dotcom burst in 2001. Nearly two decades later, the e-commerce platform became only the second U.S. company to reach the $1 trillion valuation mark.
“There was a day in 2013 when we were down 70% overnight. Nobody likes being down like this. But this is what investing in crypto is all about,” Kern said.
Ran Neuner of CNBC’s Crypto Trader also predicted that the market’s recent capitulation is a sign that we are approaching a final bottoming process for bitcoin and alternative coins. Earlier this week he tweeted:
“Up until now even though we have been in a bear market we haven’t seen panic or capitulation. In the last few days panic is clearly upon us. It’s a great signal that the bottom is near…”
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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