According to Bloomberg, shares in key crypto mining businesses fell dramatically on May 9, following the stock market on the New York Stock Exchange. The crypto market has been struck hard by mounting worries about the Federal Reserve tightening its monetary policies, which might send the US economy into recession. Marathon Digital Holdings, the largest in the United States by market capitalization, fell 15% ($12.78), bringing the company’s losses to over 60%.
According to Yahoo Finance, shares of Core Scientific Inc. and Riot Blockchain Inc. fell 14.6% and 18.23% on the Nasdaq, respectively, to conclude the day with losses of 14.60% and 18.23%. Much like Bitcoin (BTC), mining company stock has plunged from all-time highs. These crypto miners have hit annual lows, despite having substantial amounts of the world’s largest cryptocurrency on their balance sheets.
Steven McClurg, Chief Investment Officer of Valkyrie Investments, remarked:
“Crypto and equity markets are largely selling off in tandem due to a broad risk-off environment where many investors are moving to cash.”
He went on to say:
“The correlation between the two asset classes has grown more pronounced in recent months because the number of publicly traded companies involved in blockchain and digital assets continues to grow, and is not likely to reverse course.”
According to CoinMarketCap, BTC has dropped 10.40% to $30,924 following a sell-off of risk assets over the weekend. Following the Fed’s statement that interest rates will be hiked to try to bring runaway inflation under control, shares in technology businesses also declined.
Major indexes have dropped considerably from their November highs. The Nasdaq 100, which is heavily weighted in technology, was down 25%, while the S & P 500 was down 14%.
Bitcoin and the larger crypto market have been heavily damaged by risk aversion. The crypto market has been extremely volatile so far in 2022, with no evidence of a comeback to last year’s highs.
Profit margins for miners have been declining as well, and not simply because of the bad market. Mining bitcoin has become more expensive as a result of the sanctions imposed on Russia for its invasion of Ukraine and the following spike in energy prices.
Other crypto mining stocks, such as MicroStrategy and Coinbase Global, have also been losing money, and the market outlook for the next several months is bleak.
According to McClurg,
“The markets will continue to sell off through the summer, especially if rate hikes continue through the June and July FOMC meetings, before staging a potential rally through the end of the year in a pattern that has largely established itself over the past decade.”
He further underlined that “one thing to watch is the yield curve, as an inversion would be a harbinger of a further selloff. Recession is imminent.”
Read more:
- Paul Tudor Jones believes crypto investments are safe as compared to stocks and bonds
- SchiffGold CEO predicts massive crypto selling and slump of blockchain-related stocks
