Crypto-related companies have seen their shares drop for a day, as BTC fell below a local threshold following a Fed announcement.
Stocks of crypto-related companies have tumbled, as Bitcoin fell below $20,000 on the back of increasingly aggressive rhetoric from the Federal Reserve.
Shares of cryptocurrency miners Marathon Digital and Riot Blockchain fell 5% over the past day. Nasdaq-listed US cryptocurrency exchange Coinbase saw its shares fall 4%, while digital payments group Block lost 3%.
Meanwhile, MicroStrategy, the business intelligence firm that retains large holdings in Bitcoin, fell 5.4%.
Inflation-Focused Federal Reserve
US Federal Reserve Chairman Jerome Powell delivered a 10-minute speech to economists and central bankers last week, indicating that the monetary authority would continue to aggressively raise interest rates until inflation remains in check. 2% target.
“Restoring price stability will likely require maintaining a restrictive policy stance for some time. The historical record advises against premature policy easing,” Powell said at the annual Jackson Hole economic symposium.
Powell also said that the decision on how far to extend key interest rates in September “will depend on the totality of the incoming data and the evolution of the outlook.”
Holger Zschaepitz, a popular market commentator for the German publication Die Welt, said the speech hit “all the aggressive notes” and that Powell “skipped the more moderate ones.”
“The tough traits were his acknowledgment of the pain likely to be needed to bring down inflation: no soft landing anymore, the indication that rates will have to be pushed above neutral,” he added in part of the Twitter comments.
As inflation and higher interest rates have put double pressure on the economy, investors have fled riskier assets such as cryptocurrencies and tech stocks. For example, these recent comments caused Bitcoin to drop below $20,000 for the first time since July 13.
Bitcoin’s decline has lately mirrored the movement in stocks, according to Sevens Report Research founder Tom Essaye. Because they are both “waiting for the resolution of what’s going to happen with the economy, and nobody knows,” he doesn’t see Bitcoin as anything different than stocks, he told Barron’s. Following Powell’s aggressive comments on Friday, the S&P 500 slumped 3.4%.
Meme Stocks Will Remain
Meanwhile, meme stocks, another financial trend closely associated with crypto thanks to trading platforms like Robinhood, appear to have become a fixture.
Nearly two-thirds of the 522 respondents in the latest MLIV Pulse poll expect some form of meme mania to persist. Although the survey revealed that meme stocks will likely hold up, 69% of respondents said the phenomenon is unlikely to see trading volumes as it did during its January 2021 peak.
“We see aspects of the community within meme stocks, so as long as investors build a community and get in, they will find their way into meme stocks,” said Callie Cox, US investment analyst at eToro. “Meme stocks are just another way for retail investors to engage with the market.”
As a consequence of Powell’s assertions, the S&P 500 closed down 3.4% on the day, hitting its lowest levels since late July. The Nasdaq Composite Index copied the move and extended losses, down 4%.
Overall, the US stock market lost more value than the entire market capitalization of Bitcoin and altcoins combined.
The total cryptocurrency market capitalization itself fell from $1.029 trillion to $936.87 billion at one point overnight, representing a drop of 8.95%, according to data from Cointelegraph Markets Pro and TradingView.
By Audy Castaneda
