Crypto stocks rally despite tech-heavy indexes slipping lower

Crypto stocks rallied on Tuesday, despite tech-heavy indexes slipping into the red.

Coinbase shares increased 1.5% to $81.76, and MicroStrategy gained 1.7% to reach $348. Miners saw even better gains, with Bitfarms rising nearly 4% as Riot Platforms jumped 3.7%.

Crypto-related stocks outperformed the Nasdaq, which opened the day in the red, falling 0.8% to 13,815 points. The S&P 500 was also down, falling 0.4%.

Deutsche Digital Assets Head of Research André Dragosch told The Block that Tuesday’s positive price action from blockchain equities was “a kneejerk reaction to the oversold market conditions that persist at the moment.” He sees gains from firms like MicroStrategy or Marathon Digital as “high beta plays” on the positive price trajectory that bitcoin has posted in the past 24 hours. 

Earlier this week, the world’s largest digital asset by market capitalization declined to three-month lows before jumping back above the $26,000 level. Bitcoin’s price has climbed 3% over the past day to $26,007 at 2:30 p.m. ET, according to CoinGecko.

Altcoins vulnerable as FTX asset sell-off looms

The price recovery of bitcoin in the past 24 hours may be constrained due to the absence of immediate bullish catalysts on the horizon, and optimism concerning the potential approval of a spot Bitcoin ETF has waned. Investors have more immediate worries, meanwhile, redirecting their attention toward upcoming liquidations of FTX’s remaining crypto asset holdings.

Investors are concerned that periodic altcoin sell-offs in the coming months will pose a significant obstacle to altcoins achieving meaningful price appreciation. SOL has risen by only 0.9% in the past 24 hours to $17.83, whilst ether posted a daily increase of 2% to $1,591, as of the time of writin.

“The fact that altcoins have already underperformed bitcoin implies that the risk-reward for them has become more asymmetric,” Dragosch said. “Altcoin outperformance vis-à-vis bitcoin tends to be procyclical, altcoins outperform in BTC bull markets and underperform in BTC bear markets. So this is really signaling that we might still be in a general over-arching bear market.”

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