Shares of cryptocurrency exchange Coinbase ended their worst week of the year on Friday, September 6, after falling about 20% during the week, to their lowest level since February at $147.35 per share.
The drop in the company's shares, which are locked in a legal battle with the Securities and Exchange Commission over whether the exchange is engaging in unregistered sales of securities, comes as cryptocurrency prices have slumped.
Shares of bitcoin mining company Marathon Digital also fell 20%. A basket of cryptocurrency-related stocks tracked by Schwab fell to its lowest level since February, according to CNBC.
The industry-wide selloff reflected growing concerns about the health of the U.S. economy and tracked a broader slide in the prices of bitcoin, ether and risk assets in general. The technology-heavy Nasdaq fell 5.8% for the week, its worst performance since January 2022.
In addition to the overall pressures, the calendar is not doing crypto any favors. According to CoinGlass, September is historically a tough month to trade for crypto assets, with Bitcoin losing an average of 4.8% during the month over the past few years. The Cryptocurrency Fear and Greed Index, a measure of crypto market sentiment, is in the extreme fear zone, indicating that investors are concerned about price action.
Bitcoin fell to its lowest level since February during Friday trading, to less than $54,000.
In a week that included only four sessions due to the Labor Day holiday, Tuesday, September 3, saw the sharpest selloff in the broader market after weak manufacturing data raised fears of an economic slowdown. The 11 U.S. bitcoin exchange-traded funds had their worst day in more than four months after the report, with more than $287 million collectively pulled from the ETFs.
Data has been poor through the weekend. On Friday, the Bureau of Labor Statistics reported a slowdown in the labor market with fewer jobs added in August than expected.
The latest US labor market results were a moment of truth for risky assets like bitcoin, with the labor market seen as the key sector that could influence the Federal Reserve’s decision to cut interest rates this month, according to 21Shares research analyst Lina Eldeeb.
The total cryptocurrency market cap has fallen by about 30% from its 2024 peak of $2.67 trillion, and is now at $1.91 trillion. Altcoins such as Solana’s SOL token, XRP and Cardano’s ADA have all fallen by more than 8% in the past week. Ethereum, the world’s second-largest cryptocurrency, is down 12% over the week to around $2,200.
Cryptocurrency Stocks Hit Hardest
While the past week has been tough for risk assets of all kinds, cryptocurrency investors have fared particularly badly.
Schwab Asset Management's STCE exchange-traded fund, which includes MicroStrategy, Marathon Digital, Riot Blockchain and Coinbase, fell 11%.
MicroStrategy, the bitcoin mining company founded by Michael Saylor, is down 14% for the week following a 12% decline the previous week.
All major bitcoin miners ended the week with double-digit declines, led by CleanSpark which dropped 24%. Riot Platforms shares lost about 17% of their value.
The downward slide is a continuation of last month’s performance. However, even as token and asset prices fell significantly, trading increased in August, with overall average daily volume up 8% from the previous month, JPMorgan Chase analysts said in a note on Friday, citing TradingView estimates.
Interest Decision and Presidential Debate
As investors turn to what's next, one key factor to focus on is the US Federal Reserve.
The Fed could cut rates for the first time in four years when it meets on Sept. 17-18. Fed Chairman Jerome Powell said last month that it was time to adjust interest-rate policy. Analysts are forecasting either a 0.25% or 0.5% cut from the current rate of 5.25%-5.5%.
Looser monetary policy is usually a good thing for risky assets like cryptocurrencies, which tend to see more investor inflows when borrowing costs fall.
The latest inflation reading comes on Wednesday with the August CPI. The reading is another key measure the Fed will look at ahead of its September meeting.
Tuesday’s U.S. presidential debate could also prove to be a price mover for cryptocurrency markets. Republican nominee Donald Trump has described himself as a pro-crypto candidate for president and recently headlined the biggest bitcoin event of the year in Nashville.
Many in the industry see a potential second Trump presidency as a catalyst for the industry, in part because of his pledge to remove Securities and Exchange Commission Chairman Gary Gensler, who has long been seen as a cryptocurrency skeptic.
