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Crypto Company Stocks Plunge Amid Middle East Tensions and Economic Woes
Explore the recent plunge in crypto company stocks triggered by escalating tensions in the Middle East and ongoing economic challenges. Understand the factors influencing market volatility and what it means for investors in this turbulent landscape.
Crypto Company Stocks Decline Amid Global Tensions and Economic Concerns
On Monday, stocks of crypto-related companies experienced a significant downturn as rising tensions in the Middle East, coupled with growing apprehensions about the strength of the global economy, led to a sharp decline in the prices of major cryptocurrencies like bitcoin (BTC) and ether (ETH). Both cryptocurrencies hit their lowest levels in several months, reflecting the market’s volatility.
Notably, the crypto exchange Coinbase (COIN) saw a steep drop of over 9% in pre-market trading within the U.S. Similarly, MicroStrategy, a software firm known for its aggressive acquisition of bitcoin—holding more than 1% of the total supply—suffered a loss of 13%. In Sweden, CoinShares, a leading crypto asset manager, experienced a 7.5% decline.
The downturn in the crypto market followed disappointing economic data from the U.S., which revealed that the world’s largest economy might not be as robust as previously believed. On Friday, the Labor Department released job figures that fell below analyst expectations, along with an unexpectedly high unemployment rate. Compounding these economic concerns, tensions in the Middle East escalated after Iran threatened retaliation against Israel following the assassination of Ismail Haniyeh, the political chief of the terrorist group Hamas, in Tehran last week. Haniyeh had been designated a terrorist by the U.S. back in 2018.
Bitcoin, the largest cryptocurrency by market capitalization, plummeted as much as 15% on Monday, dipping below the $50,000 mark for the first time since February before making a slight recovery to trade around $52,000. Meanwhile, ether, the second-largest cryptocurrency, faced its seventh consecutive day of decline, marking its biggest drop since May 2021. The CoinDesk 20 Index (CD20), which tracks the performance of the broader crypto market, fell nearly 20%, with a 16% decrease reported as of 09:00 UTC. This bearish sentiment also reflected in equity markets across Asia and Europe, which experienced declines.
As the price of bitcoin fell, so too did the stocks of cryptocurrency mining companies. Marathon Digital (MARA) and Iren (IREN) both saw their shares tumble by nearly 14%. Hut 8 (HUT) dropped 12%, while Riot Platforms (RIOT) experienced a loss of 11%.