Bitcoin, cryptocurrencies are 'losing their luster': Wolfe Research

Cryptocurrencies seem to be losing steam, which seems an interesting shift from the hype of past years when extra cash and excitement pushed prices to new heights, according to Wolfe Research.

The report highlights a clear divide between cryptocurrencies and equities, with equities outpacing cryptos since March. Wolfe points out that while Bitcoin has held steady in absolute terms, it’s stuck in a downward trend, with the easiest path likely being further decline. 

“There are a number of factors at play, and at the moment all seem to be working against Crypto. This is a much different backdrop than years past when excess liquidity and sky-high enthusiasm sent Crypto 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's a decisive breakout in either direction. 

After reaching a record high of $73,798 in March, Bitcoin has pulled back, with repeated attempts to rally back to that peak falling short. Events that once sparked enthusiasm, like inflows into US Bitcoin ETFs or hopes for future Federal Reserve interest-rate cuts, now seem to have less impact.

“Price has chopped around and worked incrementally lower since peaking in March. Strong conviction lacks 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 Ethereum, which saw a breakdown last week, suggesting further downside is likely. 

Moreover, Wolfe Research's outlook suggests that the crypto market may face more challenges ahead, with key assets showing signs of weakening momentum.

“Much like the Ai trade, which we also think has seen its best days for now, Crypto looks to have run out of steam. We only anticipate this trend continuing as Alt coins across the board break down to fresh lows,” the report reads.