It was a rough night for U.S. stock markets, shaken by a bleak outlook. Cryptocurrencies followed suit, with sharp declines in recent hours. What’s going on?
Wall Street Plummets Overnight
Overnight, U.S. stock markets were particularly shaken. The S&P 500 lost $1.5 trillion in market capitalization in less than two hours. The index, which tracks major U.S. companies, lost $15 billion per minute for about 100 minutes.
As a result, the S&P 500 closed down 1.56%, while the Nasdaq fell 2.15%. Boosted by Nvidia’s earnings, the Dow Jones, meanwhile, limited its decline to 0.84%.
Investors appear to have been influenced by the release of the September jobs report, which reinforces the scenario that the Federal Reserve will keep rates unchanged in December.
Bloodbath in the cryptocurrency market
Investors’ pullback from “risky” assets was also evident in the cryptocurrency market, where prices failed to halt their decline overnight. The price of Bitcoin (BTC) has fallen 8.8% over the past 24 hours, while Ethereum’s ETH has dropped 10.3%. The largest cryptocurrency is approaching the psychological threshold of $80,000, after breaking through the $90,000 mark three days ago:
Bitcoin’s (BTC) tough week, which saw it reach $81,000
In the top 10, the biggest losers are Solana’s SOL and Dogecoin (DOGE), both down 11%. The total cryptocurrency market cap has plummeted 8.4% since yesterday.
Among the top 50 cryptocurrencies, only one is posting a gain: Zcash (ZEC). The anonymous cryptocurrency, which has been in the spotlight in recent weeks, is up 3.6% since yesterday.
Outlook and Next Steps
The performance of cryptocurrencies over the next few days will depend on several signals from institutional investors. ETF flows have indeed shown a sharp decline this week. BlackRock’s Bitcoin ETF, for example, saw a record daily outflow two days ago, losing $523 million.
This fits into a scenario where investors are repositioning toward assets perceived as less risky. This is especially true as the U.S. Federal Reserve is sending increasing signals of a pause.
It has noted that the labor market is softening… but without any rapid deterioration. In other words, a rapid rate cut to support employment does not appear to be on the horizon. Inflation, meanwhile, remains above 2%, a key threshold above which the Federal Reserve does not consider cutting rates.
The context therefore seems to point toward a continued downward trend for cryptocurrencies, amid a political and economic situation that remains tense in the United States.
