Bloomberg reported that crypto mining companies’ stocks continued to fall on Monday, following the stock market’s trend on the New York Stock Exchange.
The Federal Reserve’s tightening of monetary policy is causing people to worry about the economy, which might lead America into a recession. The fear has hit the crypto market hard.
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The largest company in the U.S. by market valuation, Marathon Digital Holdings, plunged 15% ($12.78). The company’s losses increased to approximately 60% due to this plunge.
According to Yahoo Finance, shares of Core Scientific Inc. and Riot Blockchain Inc. plummeted on the Nasdaq to end the day with losses of 14.60% and 18.23%, respectively.
Crypto miners have hit yearly lows as shares in crypto mining companies fall alongside Bitcoin (BTC). As a result, these crypto pioneers, which hold large volumes of the world’s most popular cryptocurrency on their balance sheets, are currently dealing with an unprecedented decrease in this industry.
Chief Investment Officer at Valkyrie Investments, Steven McClurg, commented that;
Crypto and equity markets are largely selling off in tandem due to a broad risk-off environment where many investors are moving to cash.
He further added;
The correlation between the two asset classes has grown more pronounced in recent months because the number of publicly traded companies involved in blockchain and digital assets continues to grow, and is not likely to reverse course.
After a sell-off of risk assets over the weekend, BTC had fallen 10.40% and was trading below $30,000, according to Tradingview.com. In response to the Fed’s announcement that interest rates would be raised to bring runaway inflation under control, shares in technology companies similarly deteriorated.
The Nasdaq 100 and the S&P 500 indices fell significantly in value from their peak levels in November. The Nasdaq 100 was down by 25%, while the S&P 500 lost approximately 14%.
Crypto Mining Companies Facing Dual Challenge
Crypto mining company shares hit record highs in 2021 when China banned crypto mining. This caused competition to disappear or relocate, but recently these values have decreased significantly.
Crypto miners’ profits have decreased because of the bear market and the increased costs of mining cryptocurrency. In addition, the sanctions imposed on Russia for the invasion of Ukraine have caused energy prices to go up, which has driven the cost of mining cryptocurrency up.
Many crypto mining companies like MicroStrategy and Coinbase Global have been trading at a loss. Moreover, the market outlook for the next few months is anything but optimistic.
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McClurg shared his opinion that in the short term;
The markets will continue to sell off through the summer, especially if rate hikes continue through the June and July FOMC meetings, before staging a potential rally through the end of the year in a pattern that has largely established itself over the past decade.
He further underlined that;
One thing to watch is the yield curve, as an inversion would be a harbinger of further selloff. Recession is imminent.
Featured image from Pixabay, chart from Tradingview.com
Source: https://bitcoinist.com/recession-fears-cause-crypto-mining-stocks-to-suffer/