The cryptocurrency market suffered a correction Tuesday, with the Ethereum ecosystem taking a big hit.
The dip comes as markets brace for major earnings reports, the next Federal Reserve meeting, and the Q2 GDP print over the next few days.
After today’s dip, the value of the cryptocurrency market has fallen below $1 trillion.
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Coinbase and MicroStrategy stocks have also taken a battering today as crypto and global financial markets await the next Federal Reserve meeting and upcoming Q2 GDP print.
Crypto Market Slides Below $1T
The crypto market has been hit by another selloff.
Bitcoin, Ethereum, and other major assets tumbled Tuesday during what’s expected to be a volatile week for crypto and global financial markets. According to data from CoinGecko, Bitcoin is trading at around $21,000 at press time after taking a 4.9% hit while Ethereum has plummeted to $1,390 after suffering a 9.1% downturn.
Many other Ethereum-adjacent assets, including Lido’s LDO token, Convex Finance’s CVX, Uniswap’s UNI, and Polygon’s MATIC have posted double-digit losses in the last 24 hours, casting doubt on the strength of the so-called “Merge trade” in the lead-up to Ethereum’s long-awaited Proof-of-Stake upgrade.
Crypto-centric stocks were also hit today as U.S. markets opened. Coinbase’s COIN is down 15.3% on the day trading at about $57 following the news that the SEC is investigating the exchange on allegations of listing unregistered securities, while MicroStrategy’s MSTR, which has performed in close correlation with Bitcoin since the firm made a push to acquire billions of dollars worth of the top crypto, has slid 10.2% to roughly $239.
Markets Brace for Volatility
The downturn comes ahead of a busy few days for financial markets. Alphabet and Microsoft are due to report on their second-quarter earnings later this evening, while Meta will disclose its takings for the same period tomorrow. On Thursday, Amazon and Apple will both reveal their earnings. Traders will be watching the Big Tech company calls closely over the next few days as they could help give an indication of the state of the economy. Tesla revealed last week that it had reduced its Bitcoin position by 75% in the second quarter, most likely selling its holdings at a loss (Tesla spent $1.5 billion on Bitcoin at an average cost basis of around $32,000 per coin in early 2021, but Bitcoin tumbled as low as $18,000 in Q2).
Besides the various earnings calls to come this week, markets are bracing for Wednesday’s Federal Open Market Committee. Fed Chair Jerome Powell is expected to announce a 75 basis point interest rate hike as the central bank aims to curb soaring inflation rates in the U.S.; the Fed’s recent rate hikes have led to market selloffs as investors look to move risk-off. The Bureau of Economic Analysis’ GDP print for the second quarter of the year is also slated to drop this Thursday, potentially reinforcing the signs of a looming recession if the economy shows another retraction (the economy shrank by 1.6% in Q1).
The White House shared an interview transcript with Treasury Secretary Janet Yellen commenting on the state of the U.S. economy Sunday, dismissing claims that the U.S. economy could be in a recession. While recessions have historically been defined by two quarters of economic retraction, Yellen affirmed that the technical definition of a recession accounts for “a broad range of data” compiled by the National Bureau of Economic Research.
After today’s bleed, the total value of the cryptocurrency market has once again slid below $1 trillion. The global crypto market capitalization is around $996 billion at press time, down almost 70% from its November 2021 peak.
Disclosure: At the time of writing, the author of this piece owned ETH, MATIC, and several other cryptocurrencies. They also had exposure to UNI in a cryptocurrency index.
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