Tech
Cryptocurrencies Suffer Alongside Tech Stocks Collapse, Ether Slips 6%
- Disappointing quarterly earnings from Alphabet and Tesla on Tuesday evening weighed on the rest of the tech sector, as investors abandoned high-risk assets, including cryptocurrencies.
- With cryptocurrencies in general declining, cryptocurrency-related stocks have also seen a decline.
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Cryptocurrencies fell a day after a turnaround in technology stocks pushed the S&P 500 and Nasdaq Composite to their highest levels worst day since 2022.
Bitcoin was down 2% at $64,603.34 on Thursday, according to Coin Metrics. Disappointing quarterly earnings from Alphabet and Tesla on Tuesday evening weighed on the rest of the tech sector, as investors abandoned high-risk assets, including cryptocurrencies.
“It’s pretty clear that the setbacks are more about broader macroeconomic forces, with global financial markets in turmoil,” said Joel Kruger, market strategist at LMAX Group. “Concerns about the health and prospects of the global economy have intensified amid weaker economic data, lower U.S. earnings and ineffective central bank dovishness. As a result, there has been nowhere to hide, with most major assets across currencies, commodities and stocks fleeing traditional safe havens.”
The market is still struggling with a Mt. Gox Refund Program in Progress which led to a Bitcoin’s persistent cycle of selling pressure this month, he added.
In the meantime, ether fell 6% to $3,172.59 as newly launched ether exchange-traded funds traded for a third day. Grayscale Ethereum Trust (ETHE)converted into ETFs, it recorded outflows of $484 million in the previous session.
“What’s happening is the same as when spot bitcoin ETFs launched in January,” said Yuya Hasegawa, a cryptocurrency market analyst at Japanese bitcoin exchange Bitbank. “Grayscale’s Ethereum trust had been trading at [a] discount for a long time, so traders may have bought some shares of the trust and are now selling spot ETH for arbitrage – this is also what happened with bitcoin when ETFs first started trading.”
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Bitcoin and other cryptocurrencies are under pressure from the tech-driven stock market crash
While bitcoin fell for a couple of weeks after the launch of bitcoin ETFs in January, the introduction of ether ETFs is launching in a different market and investors can expect potentially positive news that could boost prices, Hasegawa said.
Thursday marks the start of the Bitcoin 2024 conference, where investors are expecting speeches from pro-bitcoin U.S. politicians from both parties, in addition to Donald Trump. Expectations for a Fed rate cut in September are also growing.
With cryptocurrencies in general declining, cryptocurrency-related stocks have also seen a decline. Monetary base fell by 3%, while Microstrategy fell 2%. One of the most popular mining stocks, Iris Energy, lost 5%, while Riot platforms fell by 3%.
Kruger called the recent setbacks in the cryptocurrency sector “a small blip in a strong uptrend,” noting that bitcoin and ether are up 51% and 38%, respectively, year to date, contrasting with the S&P 500’s 14% gain over the same period.