- American stocks are in a steep sell-off, led by technology companies.
- Bitcoin and most cryptocurrencies are also in a freefall.
- There are numerous reasons, including the Federal Reserve, that are causing the sell-off.
Stocks and crypto markets are crashing today, erasing billions of dollars in value. The tech-heavy Nasdaq 100 Index retreated by 570 points, while the S&P 500 and Dow Jones fell by 100 and 280 points, respectively. Bitcoin and most altcoins were deep in the red, with the industry’s market capitalization falling by over 3.15% to $2.13 trillion.
Why the Stock Market is Going Down
The stock and crypto markets are declining amid concerns that the Federal Reserve will begin raising interest rates later this year. A report released on Friday revealed that the economy created over 172k jobs, a sign that the economy was doing fairly well.
Another report coming out on Wednesday is expected to show that the headline consumer inflation jumped 4.2% in May, the highest level since the Joe Biden era. Such a move will push the Fed to embrace a more combative tone in its confrontation with inflation. This explains why US bond yields are in an uptrend.
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The stock market is also crashing after some top Wall Street banks warned of upcoming volatility and even pullbacks. For example, Citigroup analysts warn that short-selling in the industry has jumped sharply over the past few days. Barclays and Goldman Sachs also warned of volatility after last Friday’s sell-off.
Stocks are also falling as investors await Oracle’s earnings on Wednesday. Oracle is one of the biggest players in the United States with a market capitalization of over $578 billion. It is a leading AI infrastructure company with a backlog of over $550 billion. As we saw with Broadcom last week, there is a risk that Oracle’s earnings may have a ripple effect in the tech sector.
Crypto Market Crash Triggered by Major Events
The crypto market crash is happening for several reasons. First, there are concerns about the industry’s security as hacking increases. For example, Humanity Protocol price plunged by over 90% today, erasing millions of dollars in value.
This hack happened after the coin soared to a record high, raising concerns of market manipulation. This also explains why some of the top laggards today are also among the top gainers recently. They include tokens like Venice Token, Hyperliquid, DeXe, and Ethena.
Data shows that hacks have surged in the past few months. In total, close to $2 billion has been stolen in the past 12 months.
The crypto market is also falling due to ongoing selling by US investors. Data show that spot Bitcoin ETFs shed over $97 million in assets on Monday, following a $325 million decline last Friday. These funds have experienced redemptions totaling over $4.2 billion over the past four consecutive weeks.
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