Impact of IT sector and venture capital on cryptocurrencies
The recovery of Bitcoin and other cryptocurrencies has recently slowed against the backdrop of a general decline in the stock prices of IT companies and venture capital. According to analysts, the cryptocurrency market is showing almost perfect correlation with the dynamics of a key software sector ETF, which lost another 5% on Monday and reached a new annual low.
This trend is explained by the fact that IT companies and startups supported by venture investors are among the key players in the cryptocurrency market. Their activity and the influx of investments into the sector largely determine the dynamics of cryptocurrency prices. When interest in risky investments declines, this is directly reflected in the exchange rates of the leading cryptocurrencies.
In addition, many traders and arbitrageurs operating at the intersection of traditional finance and cryptocurrencies are forced to reduce their positions amid the overall deterioration of market conditions. This also creates additional pressure on cryptocurrency quotations.