Bitcoin's Decline Amid Stock Market Gains
On Thursday, Bitcoin continued its downward trend, trading just below the $58,000 mark, a decrease of almost 5%. This decline occurred even as stock indices like the Nasdaq and S&P 500 ended Wednesday positively, buoyed by US inflation data that aligned with economists' expectations. Despite trading comfortably above $61,000 prior to the release of the US Consumer Price Index (CPI), which saw July's year-on-year figure increase by 2.9%, Bitcoin faltered. This CPI data marked the first sub-3% rise since 2021, encouraging expectations of a potential rate cut by the Federal Reserve in September. According to the CME FedWatch Tool, traders are now betting on a 62.5% chance of a 25 basis point rate cut at the upcoming Federal Open Market Committee Meeting (FOMC), with a 37.5% chance of a 50 basis point cut.
Ethereum and the Broader Cryptocurrency Market
Similarly, Ethereum experienced a price drop of around 5%, settling near $2,600 after fluctuating between $2,650 and $2,750 prior to the inflation data release. The overall global cryptocurrency market capitalization fell by 3.5% to $2.15 trillion. This decline contrasts sharply with the buoyant stock market, reflecting the differing impacts of inflation expectations on digital versus traditional assets.
Stock Indices Gain After Inflation Data
In contrast to the cryptocurrency market's decline, equities rose following the latest US CPI report. By the end of Wednesday's trading session, the S&P 500 had increased by 0.38% to 5,445.21, the Dow Jones Industrial Average climbed 0.61% to 40,008.39, and the Nasdaq added 0.029% to 17,192.60. Continuing the momentum on Thursday, stock futures showed the Nasdaq up by 0.24% and the NYSE Composite increased by 0.52% in pre-market trading.
Aave's Resilience in a Downturn Market
While most cryptocurrencies saw declines, Aave, a decentralized finance (DeFi) platform, demonstrated resilience with its token rising over 7% to $104.98 on Thursday. This growth followed an announcement from Aave's founder, Stani Kulechov, who revealed that the protocol had achieved approximately 40,000 active weekly users, surpassing its previous peak in late 2022. Data from Dune Analytics suggests this increase is fueled by new lending markets like Base and Scroll.
Aave operates across 12 blockchain networks, offering overcollateralized loans where users can deposit major cryptocurrencies as collateral. The process is governed by smart contracts, which automate tasks such as fund distribution, collateral management, and fee assessment, illustrating a practical use case of blockchain technology in decentralized finance (DeFi).
