Cryptocurrency stocks are hit hard on Friday as weakness in US stocks spread through subprime assets, boosting Bitcoin. below $66,000.
Cryptocurrency exchange Coinbase (COIN) and digital asset conglomerate Galaxy (GLXY) fell nearly 7%, while exchange Gemini (GEMI) fell nearly 9%, marking one of the steepest losses of the group. Cryptocurrency broker Robinhood (HOOD) also fell nearly 6% as increasing its share buyback pace offered little help in stopping the bearish trend.
Balances linked to Bitcoin also fell. Strategy (MSTR) and Twenty One Capital (XXI) plunged about 6%. Ethereum-focused treasury names such as Bitmine Immersion (BMNR) and Sharplink Gaming (SBET) fell about 5%.
Miners, many of whom operate as leveraged bets on both bitcoin and artificial intelligence infrastructure, extended their declines. Riot Platforms (RIOT), CleanSpark (CLSK), IREN (IREN), HIVE Digital (HIVE), and Hut 8 (HUT) all posted losses of 5% to 8%.
Even MARA (MARA) and Bitdeer (BTDR), which outperformed on Thursday, have given back all their gains and fell 6% and 8%, respectively, joining the sector-wide decline.
Elimination of 17 trillion dollars
The Federal Reserve faces an increasingly complicated context, weighing renewed inflationary pressure from rising oil prices against signs of a deteriorating labor market.
Richmond Fed President Tom Barkin warned that higher gasoline costs could hit consumer spending, while describing contracting conditions as “fragile.” Meanwhile, Philadelphia Federal Reserve President Anna Paulson said the war in Iran created “new risks to both inflation and growth.”
The 10-year Treasury yield, which hit nearly 4.5% early Friday, erased today’s rise following central bankers’ remarks. The two-year yield, which is more sensitive to Federal Reserve policy, fell to 3.91% after previously rising to 4.03%.
Still, investors have predominantly shifted from expecting rate cuts this year to considering the central bank raising rates as inflation rises.
The selloff in recent months has been broad across stocks, with roughly $17 trillion in market cap wiped off highs in the Magnificent Seven (the seven largest tech stocks, including Nvidia (NVDA), Google (GOOG), and Microsoft (MSFT), gold, silver, and bitcoin. .
Bitcoin hit its all-time high in early October at $126,000, while gold, silver and US stocks peaked in late January before reversing sharply. Since then, bitcoin is down about 45%, silver is down about 45%, gold is down about 20%, and the Magnificent Seven have entered double-digit declines from their peaks.
The tech-heavy Nasdaq 100 index has now entered correction territory, trading more than 10% off its January all-time high. The broad S&P 500 is also inching closer to a correction, currently down 8.5%.
While bonds have also been hit hard, global fixed income markets remain under broad pressure, with the iShares 20+ Year Treasury Bond ETF (TLT) falling about 0.3% on Friday and 5% over the past month since the conflict began.
Over the same period, the S&P 500 has fallen about 6%, highlighting the underperformance of the traditional 60/40 portfolio as global yields continue to rise, weighing on sovereign debt markets.
Relief on Monday, risk reduction on Friday
This week has followed a familiar playbook since the Middle East conflict began in late February, with strong gains on Monday, driven in part by relief that the “Black Monday” scenario has not occurred, averaging around 3%, followed by steady profit-taking that weakens as the week progresses, particularly as optimism fades around the full reopening of the Strait of Hormuz.
For Thursday and Friday, performance typically deteriorates further as investors reduce risk ahead of the weekend amid ongoing geopolitical uncertainty.
