Cryptocurrency Stocks Slide as Bitcoin Hits One-Month Low
As the price of Bitcoin plummeted to a one-month low, cryptocurrency-exposed stocks took a hit in premarket U.S. trading on Wednesday. By 06:54 EST (10:54 GMT), Coinbase, Cipher Mining, CleanSpark, Marathon Digital, and Riot Platforms all saw declines ranging from 0.4% to 2.2%.
The dip in cryptocurrency prices was fueled by concerns over weaker-than-expected U.S. manufacturing data, raising fears of an economic slowdown. This led to the sharpest selloff on Wall Street in a month as investors returned from the Labor Day holiday.
Bitcoin, Ethereum, and Litecoin all saw drops as the global crypto market cap fell below $2 trillion, declining by nearly 3.6% in just one day. The upcoming August nonfarm payrolls report on Friday is eagerly awaited, with analysts expecting a shift in Fed policy towards guarding against job losses rather than focusing solely on inflation.
Lower interest rates could benefit cryptocurrencies by freeing up more liquidity for speculative trading. Analysts predict a 25-basis point reduction in borrowing costs at the Fed’s upcoming meeting, with interest rates currently at a 23-year high.
In summary, the recent dip in cryptocurrency prices and stocks is a result of concerns over economic growth and potential changes in Fed policy. Investors should keep a close eye on upcoming economic reports and Fed meetings to gauge how these factors may impact their investments and financial well-being.