it’s been a tough day in the market. On Monday, Bitcoin and US cryptocurrency-related shares took a nosedive. This drop came after a weak jobs report and the Federal Reserve’s decision not to cut interest rates, sparking fears of a looming US recession.
Over the last five days, Bitcoin’s price has plummeted more than 15%, dropping below $55,000, its lowest level in nearly six months. Ether hasn’t fared any better, falling over 22% to $2,463, its lowest since January.
The impact was widespread. Crypto miners like CleanSpark, Bitfarms, Riot Platforms, and Marathon Digital saw their stocks fall between 12% and 25%. Although their shares recovered slightly throughout the day, they remained down overall.
Crypto exchange giant Coinbase saw its shares plunge by as much as 18%, and Bitcoin buyer MicroStrategy experienced a 23% drop. This shift is quite the flip for the industry, which had been riding high on hopes of relaxed regulations.
Investors were rallying behind the prospect of a Donald Trump win in November, hoping he would roll back the strict regulations imposed during Joe Biden’s presidency. Trump’s recent survival of an assassination attempt and his bullish speech at the 2024 Bitcoin Conference in Nashville, where he promised the US would become the “crypto capital of the planet” if re-elected, had previously boosted shares.
Adding to the optimism, Morgan Stanley recently told its financial advisors they could start pitching Bitcoin ETFs to wealthy clients, signaling a major shift from Wall Street’s traditionally skeptical stance on crypto.
But the market took a hit with a weak July jobs report and the Fed’s steady interest rates, leading to a massive sell-off. Analysts, like Bernstein’s Gautam Chhugani, noted that crypto markets are reacting predictably to macroeconomic and political cues. The volatility has led some, like Joshua Peck from TrueCode Capital, to advise investing directly in digital assets instead of ETFs and crypto-related stocks.
Others, like IG’s Tony Sycamore, warned that this volatility is a stark reminder of the risks associated with crypto investments, emphasizing that they remain at the high-risk end of the spectrum.
