As a seasoned analyst with over two decades of market observation under my belt, I find myself intrigued by the current state of the financial landscape, particularly the concurrent crash in both the traditional and crypto markets. The recent plunge in Bitcoin’s price and the subsequent sell-off in AI, data center, and computing sectors has raised some eyebrows.
Jim Cramer has shared his perspective on why the cryptocurrency market is crashing. The crypto market crashed on September 4 after the Bitcoin price slipped briefly below the $55,000 mark. The entire crypto market dropped 5.1% as $199 million worth of open positions comprising 75,487 traders got liquidated. The largest single liquidation order happened on the ETH/USDT pair on Binance, where the trader lost $2.94 million, according to data from Coinglass. On the other side, the traditional market wiped out $1 trillion from the U.S. stocks.
Jim Cramer Says ‘It’s not A Market-Wide Sell-Off’
In simpler terms, while both the conventional and digital markets are experiencing a significant decline, Jim Cramer on CNBC explains that this downturn isn’t affecting all sectors equally. Instead, it appears to be primarily impacting industries focused on artificial intelligence, data centers, and computing technologies
The current situation isn’t a broad sell-off across all markets. Instead, it appears to be a selling spree focused on sectors such as artificial intelligence, data centers, computing, housing, oil, and companies heavily invested in infrastructure
— Jim Cramer (@jimcramer) September 4, 2024
Following news that NVIDIA, the world’s largest chip manufacturer, faced an intensified antitrust probe by the U.S., its stock dropped nearly 10%. As a result, AI-related cryptocurrencies experienced a setback, causing the combined value of the sector to decrease by 7.3% over the past day, as reported by CoinGecko, a crypto price monitoring platform
As a researcher, I observed a decrease in the value of cryptocurrency mining stocks that utilize NVIDIA’s computer chips. Specifically, Cipher Mining (CIFR), CleanSpark (CLSK), Marathon Digital (MARA), and Riot Platforms (RIOT) saw declines of 0.4%, 2.2%, 2.2%, 1.7%, and 1.0%, respectively, during premarket U.S. trading on Wednesday. This price drop coincided with a one-month low in the price of Bitcoin
Moreover, the stock price of digital currency exchange platform Coinbase (COIN) decreased by 0.4% due to the decline in the broader crypto market. This downturn caused the overall value of the cryptocurrency market to dip below $2 trillion. However, it has managed to recover somewhat, albeit struggling to maintain its footing
August NFP Data May Shed Light on FOMC Approach
The crypto market eagerly awaits the release of the August nonfarm payrolls on Friday. Analysts expect the data to come in higher than the previous 114,000. The US Manufacturing Purchasing Managers’ Index (PMI) for August came in at 47.9, down from July’s 49.6. This reading is also the lowest in the last eight months and may have contributed to the current state of both traditional and crypto markets.
Should the NFP data surpass predictions, it suggests a robust U.S. labor market, which might bolster the expected interest rate reductions during the upcoming FOMC meeting. Conversely, if the data falls short of expectations, it could cause Fed Chair Jerome Powell to prioritize preventing job losses over fighting inflation
According to analysts who have used the CMS FedWatch Tool, there’s a strong belief that the Federal Reserve will lower interest rates by a quarter of a percent at their FOMC meeting on September 17-18. They predict that this decision could lead Bitcoin’s price to increase in the days preceding the meeting
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2024-09-04 18:05