Is the cryptocurrency market adjusting? Bitcoin briefly fell below $113,000, Ethereum dropped 5%, and cryptocurrency stocks plummeted across the board
Investors are withdrawing from technology stocks and high-risk assets, with cryptocurrency-related stocks generally declining on Tuesday. Leading companies such as Coinbase, Circle, and Robinhood all fell by more than 5%, and the cryptocurrency treasury sector saw even greater declines. Bitcoin briefly dropped below $113,000, while Ethereum fell by over 5% at one point. This week, the market is focused on the Jackson Hole Federal Reserve annual meeting, with analysts suggesting that if Powell signals a dovish stance, it could provide a rebound opportunity for the cryptocurrency market
Cryptocurrency stocks suffered a sharp decline on Tuesday, as investors fled technology stocks and higher-risk sectors in the market.
On cryptocurrency trading platforms, Coinbase and eToro fell more than 5% and 6% respectively, while Robinhood and Bullish both dropped over 7% at one point. Cryptocurrency financial services company Galaxy Digital plummeted 12%.
In the rapidly growing cryptocurrency financial management sector, Strategy fell 8% at one point, SharpLink Gaming dropped 10%, Bitmine Immersion plunged nearly 13%, and DeFi Development fell nearly 17%. Stablecoin issuer Circle also declined by 4.5%.
Meanwhile, Bitcoin's price fell by 3% during the day, dropping below $113,000. Ethereum fell more than 5%, dropping to around $4,100.
On Tuesday, investors appeared to be withdrawing from technology stocks, with the Nasdaq Composite Index falling more than 1%, dragged down by declines in the stock prices of tech giants like NVIDIA. Last week, the tech sector had rebounded as traders bet on a greater likelihood of interest rate cuts. Additionally, Bitcoin had reached an intraday all-time high of nearly $125,000 last week.
Analysts believe that due to its focus on growth investors, narrative-driven price movements, speculative nature, and preference for low-interest-rate environments, the cryptocurrency market is often extremely sensitive to fluctuations in technology stocks.
Media reports indicate that investors are focusing this week on the Federal Reserve's annual economic symposium in Jackson Hole, Wyoming, looking for clues about the direction of Fed policy for the remainder of the year. Analysts suggest that if Fed Chairman Jerome Powell signals more dovish policies, cryptocurrencies may see a rebound.
Satraj Bambra, CEO of Rails Exchange, stated:
“As Powell is set to speak in Jackson Hole, the market typically experiences profit-taking behavior before his speech. Once there is uncertainty in the Fed's communication, traders generally reduce their risk exposure.” Cryptocurrency stocks have performed strongly in recent months, benefiting from Coinbase being included in the S&P 500 index, Circle's successful listing, and the GENIUS Act's stablecoin regulatory framework becoming law. However, investors expect a market correction during the Federal Reserve's monetary policy meetings in August and September, hoping to see central bank policymakers push for interest rate cuts at that time
