Shares of crypto-related companies fell as bitcoin plunged below $20,000 following increasingly bullish rhetoric from the Fed.
Shares of cryptocurrency miners Marathon Digital and Riot Blockchain were down 5% over the past day. Nasdaq-listed US cryptocurrency exchange Coinbase saw its stock fall 4%, while digital payments group Block lost 3%. Meanwhile, business intelligence firm Microstrategy, which maintains broader bitcoin holdings, fell 5.4%.
inflation-focused fed
US Federal Reserve Chairman Jerome Powell delivered a 10-minute-long address to economists and central bankers last week, indicating that the monetary authority will continue to aggressively raise interest rates until inflation reigns its target of 2%. Take it
As inflation and high interest rates exert double pressure on the economy, investors have fled riskier assets such as cryptocurrencies and tech stocks. For example, these recent comments caused bitcoin to drop below $20,000 for the first time since July 13.
According to Tom Essay, founder of Sevens Report Research, bitcoin’s decline mirrors the recent movement of stocks. Because both are “waiting for a solution to what’s going to happen to the economy, and no one knows,” they don’t see bitcoin as separate from stocks, he told Barron. Following Powell’s scathing comments on Friday, the S&P 500 was down 3.4%.
meme stocks will remain
Meanwhile, meme stock, another financial trend closely tied to cryptocurrencies, has become a fixture for trading platforms like Robinhood. Nearly two-thirds of the 522 respondents to the latest MLIV Pulse survey expect some form of meme stock frenzy to persist. Although the survey showed that Mem stocks are likely to stay around, 69% of respondents said the event is unlikely to see trading volume as it did during the January 2021 peak.
“We see community aspects within meme stocks, so as long as investors build community and reach, they will find their way into meme stocks,” said Kelly Cox, US investment analyst at eToro. “Mem stocks are another way retail investors are engaging with the market.”
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