Bitcoin price remained under pressure today, October 6, moving below the important support level at $110,000. The US stock market also slipped, with the S&P 500 and Dow Jones indices falling by over 0.65%. On the other hand, the gold price continued its strong rally as it moved to a record high of $4,320.
Why the S&P 500 and Dow Jones Dropped
The S&P 500, Nasdaq 100, and the Dow Jones indices dropped as the recent bull market took a breather after the strong earnings by large banks like JPMorgan and Morgan Stanley.
Top semiconductor companies like Taiwan Semiconductor and ASML also published strong financial results, signaling that semiconductor demand continues to rise in the US and other countries.
It is common for the blue-chip indices like the S&P 500 and the Dow Jones to pull back after a major rally. The crash also happened as Zions Bank ans Western Digital shares plunged after disclosing loans with fraud exposure.
These reports were amplified by the recent collapse of Tricolor and First Brands, which have led to billions of dollars in losses. Most notably, these loans have led to concerns about the private credit industry, which has $1.5 trillion in assets and is estimated to have $3 trillion by 2028.
Still, analysts note that the two cases are isolated and not systemic. In a statement to Bloomberg, an Interactive Brokers analyst said:
“Although they are similar in size and scope to Silicon Valley Bank, which caused a bit of a crisis about two-and-a-half years ago when it failed, there is nothing (at least so far) to indicate that these are anything systemic.”
Bitcoin Price Crashed as the Liquidation Hangover Continued
Bitcoin and other cryptocurrencies plunged as investors remained wary about the industry following the recent crash that led to over 1.6 million traders being liquidated. A record $19 billion was liquidated.
Therefore, investors are still afraid of moving back to the crypto industry. This explains why the Crypto Fear and Greed Index has moved to the fear zone.
Bitcoin is also seeing less demand from institutional investors this week, with spot Bitcoin ETFs shedding over $300 million in assets this week.
At the same time, Bitcoin treasury companies like Metaplanet and Strategy have slowed their purchases as their premium, which is known as the mNAV, plummets.
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Gold Price Rally Accelerates as Safe-Haven Demand Jumps
Meanwhile, gold price has continued soaring this week, bringing the year-to-date gains to over 60%. It jumped to a record high of $4,320, a trend that may continue.
Gold is rising as it has become the most important safe-haven asset this year as risks have jumped. The ongoing trade war between the US and China is one of the biggest risks in the market.
At the same time, central banks have continued to accumulate gold this year such that their holdings are worth more than the dollar reserves for the first time since 1996. These banks are opting for gold instead of the higher-yielding US dollar because of the US policy, including Donald Trump’s tariffs.
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