SAN ANSELMO, CALIFORNIA – JUNE 06: In this photo, the Coinbase logo appears on a screen on June 6, 2023 in San Anselmo, California. The Securities and Exchange Commission has filed a lawsuit against cryptocurrency exchange Coinbase for allegedly violating securities laws by acting as an exchange, broker and clearing agency without registering with the Securities and Exchange Commission. (Photo illustration by Justin Sullivan/Getty Images)
Justin Sullivan | Getty Images
Cryptocurrency exchange Coinbase just ended the worst week of the year. Bitcoin miner Marathon Digital fell 20%. A basket of crypto-related stocks tracked by Schwab fell to its lowest level since February.
The sector-wide selloff reflected growing concerns about the health of the US economy and followed a broader decline in bitcoin, ether and risky assets in general. The tech heavyweight Nasdaq fell 5.8% for the week, its worst performance since January 2022.
Aside from macroeconomic pressures, the calendar doesn’t do crypto any favors. According to CoinGlassSeptember is historically a difficult trading month for cryptocurrencies, with bitcoin posting an average loss of 4.8%. THE Crypto Fear & Greed Indexa gauge of cryptocurrency market sentiment, is firmly in the “Extreme Fear” zone, indicating that investors are concerned about price movements.
Bitcoin fell to its lowest level since February, falling 4% in the past 24 hours to around $54,000.
Bitcoin and Ether prices, year over year
In a week shortened by the Labor Day holiday, Tuesday saw the sharpest declines in the broader market as weak manufacturing data fueled fears of an economic slowdown. The 11 US exchange-traded spot bitcoin funds had their worst day in more than four months after the report, as more than $287 million was collectively pulled from the ETFs.
The data was bad until the end of the week. On Friday, the Bureau of Labor Statistics reported a softening in the labor market with August wages falling short of expectations.
Coinbase is having one of its worst trading weeks this year.
“Recent US labor market results acted as a moment of truth for high-risk assets like bitcoin, as the labor market is seen as the main area that could influence the Fed’s decision to cut interest rates this month,” said Leena ElDeeb, researcher. with ETF issuer 21Shares, in an email.
The total crypto market cap is down nearly 30% from its 2024 peak of $2.67 trillion and is now at $1.9 trillion. Altcoins like Solana G indication, XRP and Cardano ODA all fell more than 8% last week. Ether, the world’s second-largest cryptocurrency, fell 12% to around $2,200.
Crypto stocks were hit the hardest
While it was a rough week for risk assets of all kinds, investors who were heavily indexed into crypto stocks fared particularly poorly.
Schwab Asset Management’s crypto-themed ETF (STCE), which includes MicroStrategy, Marathon Digital, Riot Blockchain and Coinbase, fell 11%.
Coinbase, locked in a legal dispute with the SEC over whether the exchange is conducting unregistered securities sales, fell 20% to its lowest level since February. MicroStrategy, the bitcoin aggregator founded by Michael Saylor, fell 14% for the week after falling 12% the previous week.
Top bitcoin miners ended the week in double-digit declines, led by CleanSparkdip 24%. Riot Platforms lost 17%.
The downward slide is a continuation from the previous month. However, JPMorgan Chase Analysts said in a note on Friday, citing estimates from TradingView, that even as contract and asset prices fell dramatically, trading rose in August, with overall average daily volumes up 8% from the previous month.
Coinbase and Marathon Digital this year
As investors turn to what’s to come, a big area of focus is the Federal Reserve.
The central bank could cut its benchmark for the first time in four years when it meets on September 17-18. Fed Chairman Jerome Powell said last month that “the time has come” to adjust interest rate policy. Analysts expect a cut of either 0.25% or 0.5% from the current rate of 5.25%-5.5%.
Looser monetary policy is usually a good thing for risky assets like cryptocurrencies, which tend to see more investor inflows when borrowing costs fall.
The latest reading on inflation comes on Wednesday with August’s Consumer Price Index. The reading is another key metric the Fed will look at ahead of its September meeting.
The US presidential debate on Tuesday may also prove to be a driving force in crypto markets. Republican candidate Donald Trump has positioned himself as the cryptocurrency candidate for President and recently headlined the biggest bitcoin event of the year in Nashville. Many in the industry see a potential second Trump presidency as a catalyst for the industry, in part because he has vowed to remove SEC Chairman Gary Gensler, who has long been seen as a cryptocurrency skeptic.
CLOCK: How Trump Was “With Orange”
