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SAN ANSELMO, CALIFORNIA – JUNE 6: In this photo illustration, the Coinbase logo appears on a screen in San Anselmo, California, on June 6, 2023. The Securities and Exchange Commission filed a lawsuit against cryptocurrency exchange Coinbase for violating securities laws by operating as an exchange, broker and clearing house without registering with the Securities and Exchange Commission. (Photo Illustration by Justin Sullivan/Getty Images)
Justin Sullivan | Getty Images
Cryptocurrency Exchanges Coinbase Just finished the worst week of the year. Bitcoin miners Marathon Digital It fell 20%. Schwab It fell to its lowest level since February.
The industry-wide sell-off reflects growing concerns about the health of the U.S. economy. Bitcoin, ether And risk assets in general: The tech-heavy Nasdaq fell 5.8% for the week, its worst performance since January 2022.
In addition to macro pressures, the calendar is also having an adverse effect on cryptocurrencies. Coin GlassSeptember has historically been a difficult month for crypto assets to trade, with Bitcoin recording an average loss of 4.8%. Cryptocurrency Fear and Greed Indexa gauge of cryptocurrency market sentiment, is firmly in the “extreme fear” zone, indicating investors are concerned about price volatility.
Bitcoin has fallen to its lowest level since February, down 4% in the past 24 hours to around $54,000.
Bitcoin and Ethereum prices year to date
In a Labor Day-shortened week, Tuesday saw the sharpest sell-off across markets as weak manufacturing data stoked fears of an economic slowdown. The report led 11 U.S. bitcoin spot exchange-traded funds (ETFs) to suffer their worst day in more than four months, leading to a combined withdrawal of more than $287 million from the ETFs.
The data was bad over the weekend. On Friday, the Bureau of Labor Statistics reported weaker-than-expected payroll numbers for August, signaling a weakening labor market.
Coinbase just had its worst trading week of the year.
“The recent US labor market results have been a turning point for risk-on assets like Bitcoin, as the labor market is seen as a key sector that could influence the Fed’s interest rate cut decision this month,” Leena El-Deeb, research analyst at ETF issuer 21Shares, said in an email.
The cryptocurrency market capitalization is down nearly 30% from a peak of $2.67 trillion in 2024 to $1.9 trillion today. Altcoins like Solana are Sol token, Ripple And Cardano ADA Both fell by more than 8% last week. Ether, the world’s second-largest cryptocurrency, fell 12% to about $2,200.
Crypto stocks hit hardest
It’s been a tough week for risk assets of all kinds, but it’s been especially tough for investors who were overinvested in cryptocurrency stocks.
Schwab Asset Management’s cryptocurrency-themed ETF (Shares of STCE, which includes MicroStrategy, Marathon Digital, Riot Blockchain and Coinbase, fell 11%.
Coinbase, which is engaged in a legal battle with the U.S. Securities and Exchange Commission (SEC) over whether the exchange is conducting unregistered securities sales, plummeted 20% to its lowest since February. MicroStrategy, the bitcoin aggregator founded by Michael Saylor, fell 14% this week, following a 12% drop last week.
All of the major bitcoin mining companies ended the week with double-digit declines. Clean SparkA sharp drop of 24%. Riot Platform It decreased by 17%.
The decline has continued since last month. However, JPMorgan Chase Despite the dramatic decline in token and asset prices, trading volumes increased in August, with average daily trading volumes up 8% month-on-month, the analysts said in a Friday note, citing TradingView estimates.
Coinbase and Marathon Digital this year
As investors focus on future developments, one big focus is the Federal Reserve.
The central bank could cut interest rates for the first time in four years when it meets on Sept. 17-18. Fed Chairman Jerome Powell said last month that “it’s time” to adjust interest-rate policy. Analysts expect a cut of 0.25% or 0.5% from the current rate of 5.25% to 5.5%.
Easing monetary policy is usually a positive thing for risky assets like cryptocurrencies, which tend to attract more investor inflows when borrowing costs fall.
The latest indication of inflation will be available on Wednesday when the Consumer Price Index for August is released, another key indicator the Fed will consider ahead of its September meeting.
The US presidential debate on Tuesday may also be a factor in determining crypto market prices. Republican candidate Donald Trump has positioned himself as a pro-crypto presidential candidate and was recently the headliner at the biggest Bitcoin event of the year in Nashville. Many in the industry see Trump’s second term as a catalyst for the industry, in part because of his promise to fire SEC Chairman Gary Gensler, who has long been seen as a crypto skeptic.
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