Bitcoin and US cryptocurrency-related shares tumbled on Monday with the rest of the stock market after a weak jobs report and the Fed’s decision not to cut interest rates sparked fears of a US recession.
Bitcoin’s price has fallen more than 15%, to below $55,00, over the last five days to hit its lowest level in nearly six months, while ether plummeted more than 22%, at $2,463, its lowest since January.
Crypto miners like CleanSpark, Bitfarms, Riot Platforms and Marathon Digital fell between 12% and 25% in early trade. The companies’ shares creeped up throughout the day, but still remained down overall.
Crypto exchange site Coinbase saw shares plunge as much as 18% and Bitcoin buyer MicroStrategy shares plummeted as much as 23%.
It was a complete flip for the crypto industry, which was riding high on hopes that industry regulations were set to become more relaxed.
Crypto investors have rallied behind a Donald Trump win in November, hoping the controversial former president would pull back on the industry regulations enforced during President Joe Biden’s time in the White House.
Crypto shares soared after Trump survived an assassination attempt at a Pennsylvania rally as investors assumed the event would would propel him to a victory in November over presumed Democratic nominee Biden.
Trump’s speech at the 2024 Bitcoin Conference in Nashville, Tenn., weeks later – during which he claimed the US would be “the crypto capital of the planet” if he is re-elected – also boosted shares.
Most recently, Morgan Stanley reportedly told its financial advisors that they could begin pitching Bitcoin ETFs to their wealthy clients – signaling a positive shift from major Wall Street players who have long been skeptical of crypto.
But a weak July jobs report Friday after the Federal Reserve decided to keep interest rates unchanged earlier in the week led to a massive sell-off.
Analysts said the crypto nosedive was unsurprising, and that the crypto-related stocks would ebb and flow alongside sociopolitical pressures.
“The bitcoin and crypto market will likely trade off macro and election cues for most of (the third quarter),” Bernstein analyst Gautam Chhugani wrote in a note.
Chhugani said “we are not surprised by Bitcoin’s snap reaction as the only weekend traded market.”
Some analysts used the stock’s volatility on Monday to advise investors to pursue direct digital assets instead of ETFs and crypto-related stocks.
“If this weekend serves as a reminder of anything, it is the importance of investing in digital assets directly on native crypto exchanges,” Joshua Peck, founder of crypto hedge fund TrueCode Capital, said.
But others advised caution when entering the crypto market in any matter.
“It’s a big reminder that bitcoin and crypto in general are risk assets and sit at the pointy end of the risk spectrum,” Tony Sycamore, market analyst at IG, said.
With Post wires