Cryptocurrency stocks are down sharply in premarket trading ahead of the U.S. market open, after a weekend of slumps and worries about a U.S. recession and heightened geopolitical tensions weighed on prices until Monday morning.
Last week’s price decline in the cryptocurrency markets intensified over the weekend and then plunged on Monday morning. Bitcoin at one point plunged below $50,000, while Ether lost all of its gains for the year as the price fell below $2,200.
According to TradingView, shares of cryptocurrency exchange Coinbase are currently trading at $167 in premarket trading, down 18.5% from Friday’s close, potentially erasing all gains made since the start of the year.
Shares of MicroStrategy, a business intelligence company, corporate Bitcoin holder, and Bitcoin developer, are looking worse, down 26.3% in premarket trading. MicroStrategy announced last week that it had increased its Bitcoin holdings to 226,500 BTC and plans to file for a new $2 billion public offering.
Crypto and stock trading app Robinhood, which reportedly halted 24-hour trading on its platform amid volatility this morning, fell 15.3%. Meanwhile, Jack Dorsey’s Block, which last month agreed to supply Core Scientific with new 3-nanometer mining ASICs, fell 10% in premarket trading.
Public Bitcoin mining stocks also faced significant losses, with the top three U.S. companies by market cap — MARA, CleanSpark, and Riot Platforms — down 19.1%, 24.9%, and 16.7% pre-market, respectively.
Spot Bitcoin, Ethereum ETFs and Traditional Stocks Are Not Immune
US spot Bitcoin and Ethereum exchange-traded funds (ETFs) may have had a restful weekend, but they are not immune to price action. BlackRock’s leading IBIT spot Bitcoin ETF is currently down 19.6% in premarket trading as it catches up with the 24/7 crypto market. The asset manager’s spot Ethereum ETF, ETHA, is down 25.8% in premarket trading, and there are similar moves in spot Bitcoin and Ethereum products from other issuers.
Since the US spot Ethereum ETF began trading on July 23, Ether has been trading in the range of around $3,000 to $3,500, with all ETF holders currently locked in ahead of the US open.
Bitcoin has traded between about $38,500 and $74,000 since comparable bitcoin products began trading in January. But with bitcoin trading above $55,000 for most of that period, it’s likely that a significant number of U.S. spot bitcoin ETF holders are now also underwater on their investments.
Traditional markets also suffered as the world’s top three stocks by market cap lost further in pre-market trading, wiping out billions of dollars in value. Shares of Apple and Microsoft fell 9% and 5.9% respectively, while Nvidia lost 13.5% in pre-market amid reports of delays in its new AI chip.
Cryptocurrency Market Reaction
According to analysts, some of the factors currently making markets uneasy include heightened geopolitical tensions in the United States and growing recession fears following last week’s weak jobs report.
“The global economy is on edge due to geopolitical tensions, and the U.S. economy is facing recession pressure,” Bitget CEO Gracy Chen told The Block. “U.S. stocks have fallen for three straight days, and Japan’s stock market has entered its circuit breaker for the second straight day. The panic index VXX has surged 27% in a single day, putting macro markets under significant correction pressure, which has led to a broad-based market selloff.”
“The sentimental impact of large institutions on market behavior also plays a role, with Berkshire Hathaway’s cash pile skyrocketing after selling off Apple and Bank of America stocks over the past 12 trading sessions. Warren Buffett has been selling stocks and now has a large amount of cash, which has influenced the overall sentiment in the market,” Chen added. “On the crypto side, Jump Crypto, a major market maker in the crypto market, saw its price plunge after analysts bet that it would fall after the ETF approval.”
Chen’s comments are consistent with those of Bitfinex analysts. “The crypto selloff is driven by macroeconomic factors. We expect near-term support to establish itself at the $48,900 area. Absent bullish momentum, this area could be retested, with the macroeconomic environment at that time determining further price action,” they told The Block. “The selloff was largely, if not entirely, driven by macroeconomic factors. It was triggered by the Bank of Japan’s carry trade crisis, a disappointing U.S. jobs report, and rising unemployment. In addition, Sahm’s Rule, which has been used to accurately predict past recessions, has been applied in the U.S., increasing recession fears.”
However, Binance CEO Richard Teng does not believe the recent price declines in cryptocurrencies are indicative of a long-term trend. “The recent sharp declines in crypto and stock prices are influenced by macroeconomic factors. We do not believe they are indicative of a long-term negative trend,” Teng wrote on X. “Market volatility remains significant due to the possibility of a Fed rate cut and geopolitical volatility.”
According to The Block’s Bitcoin Price Page, Bitcoin is currently trading at $50,189, down 17.5% in the last 24 hours and 25% in the last week. According to The Block’s Ether Price Page, Ether is trading at $2,236, down 23.3% in the last 24 hours and 32% in the last seven days. Meanwhile, the GMCI 30, which selects the top 30 cryptocurrencies, is down 20.4% in the last 24 hours to 93.78, the largest daily drop for the cryptocurrency market cap since 2022.
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