Analyst: The rotation of U.S. stock sectors may drive the price of cryptocurrencies to rise

According to a report by Coindesk on July 17, Marex Solutions, the derivatives-focused division of financial services provider Marex, stated that Wall Street's shift from large-cap stocks to small-cap companies could potentially drive up the cryptocurrency market.

Since July 8th, the trading price of the Nasdaq index has barely changed and is around 2,270 points. Meanwhile, the Russell 2000 Index for small-cap stocks has surged over 12%. This suggests investors are pulling funds out of large tech firms and investing in smaller companies which have been lagging behind until recently. The Wall Street Journal attributes this enthusiasm for small caps to cooling inflation and increased confidence that the Federal Reserve will lower benchmark borrowing costs this year.

Ilan Solot, Senior Global Strategist at Marex Solutions said as Mag 7 loses momentum, capital will look elsewhere for deployment. Small-caps are an instinctive reaction but he believes cryptocurrencies will benefit from this rotation because sector rotation might be one of the most important macroeconomic factors for cryptocurrencies. It could particularly favor Ethereum's native token ETH and upcoming spot ETH ETFs.