Cryptocurrencies are staging a tentative recovery to begin the third quarter.
In early trading on July 2, Bitcoin (BTC) is trading at $61,300 U.S. and back above the key support level of $60,000 U.S.
Ethereum (ETH) and XRP (XRP) have each seen their price rise 3% in the last 24 hours, while Solana (SOL) is up 7%. Crypto trades 24 hours a day, seven days a week.
The bounce comes after cryptocurrencies suffered their worst performance in four years during this year’s second quarter. Bitcoin’s price fell nearly 20% in June alone.
Analysts note that investor capital is returning to digital assets amid a rotation out of richly valued stocks of microchip companies tied to the artificial intelligence (A.I.) buildout.
After doubling and tripling in this year’s first half, chip stocks are experiencing a sharp pullback to begin the third quarter.
High-flying stocks such as SanDisk (SNDK) and Micron Technology (MU) each fell 10% on July 1 amid profit taking and a rotation into other areas of the market.
South Korea’s Kospi index is down 8% on July 2 as its market dominating chip stocks Samsung (SSNLF) and SK Hynix (KRX: 000660) fall as much as 15% on the day.
Analysts had said that crypto declined sharply in this year’s first half as investors chased new opportunities in fast-rising chip stocks, initial public offerings (IPOs), and prediction markets.
Now, it looks as though crypto is benefitting as a rotation is underway in the market to begin the third quarter.
However, some analysts continue to warn investors to proceed cautiously with cryptocurrencies.
U.S. bank Citigroup (C) just lowered its target price for Bitcoin over the next year to $82,000 U.S. from $112,000 U.S. and warned investors about continued volatility in digital assets.
The price of BTC has been cut in half since hitting an all-time high of $126,000 U.S. last October.
