- The US stock market lost over $1 trillion of market value following weak performance across Magnificent 7.
- Bitcoin showed a positive correlation to the stock market, trading at a daily loss alongside several other cryptocurrencies.
- New stablecoin inflows have yet to be allocated, says CryptoQuant analyst.
Bitcoin (BTC) plunged more than 2% on Tuesday after the US stock market posted significant losses. The decline saw the general crypto market recording a 3.6% loss amid negative sentiment surrounding historically weak BTC September returns.
Bitcoin and crypto market decline as US stock market post loss
The US stock market extended its losses on Tuesday after wiping out $1.05 trillion from its market value. Notably, the Magnificent 7 stocks, which include Apple, Nvidia, Amazon, Meta, Microsoft, Alphabet and Tesla, lost more than $550 billion of their market capitalization in the past 24 hours, per The Kobeissi Letters.
This is not the #crypto market,
— Evan Luthra (@EvanLuthra) September 3, 2024
It's the US stock market.
More than $1.05 trillion has been wiped out from the US stock market today. pic.twitter.com/FnUlkyh3L0
A similar trend is visible in the crypto market, where Bitcoin and several other cryptocurrencies in the top 20 are trading at a daily loss. The move underscores Bitcoin's rising correlation with the traditional stock market. Unlike in previous times, when investors often switched to Bitcoin for uncorrelated exposure, the influx of traditional investors into the crypto market — especially with the launch of Bitcoin ETFs — has changed the narrative.
Crypto market performance
Bitcoin's decline also aligns with its historically weak September performance, which shows it has been the worst month for Bitcoin with an average and median loss of -4.5 and -4.35, respectively — no other month has recorded a lower average return.
BTC Monthly Performance
The same trend is noticeable in the S&P 500, which records Septembers as its worst month in the past 30 years.
#September has historically been the WORST month for the S&P500 over the last 30 years
— Susan Li (@SusanLiTV) September 3, 2024
Also around the rest of the world
1st day of trading already indicating a tough month ahead #StockMarket $spy pic.twitter.com/g3GdSfbFlO
The recent price decline comes despite an increase in stablecoin supply in the crypto market, which is a bullish trend. As a result, a CryptoQuant analyst believes most of the new capital hasn't been allocated yet.
"Much of the capital that is being allocated to stablecoins remains without providing buying pressure on the order books, but this 'firepower' could reach the market at any time," stated the analyst. "It is possible that institutional investors are buying digital assets via TWAP orders or with algorithms to reduce the impact on the short-term price," he added.
Meanwhile, Bitcoin's recent weak price action has seen Meta stock and Gold rising to challenge its outperformance as the second-best asset on risk-adjusted returns.
Bitcoin’s outperformance on risk adjusted returns is being challenged.
— ecoinometrics (@ecoinometrics) September 2, 2024
Over the last twelve months Meta and even Gold are catching up to it.
Bitcoin is still lacking a sense of direction after the launch of the ETFs at the start of the year. pic.twitter.com/PUi449z6WA
The BTC MVRV Z-Score has also flipped to a red bar, indicating a prevailing bearish sentiment. An extended period of this metric staying red could signal the beginning of a bear market.
Bitcoin, altcoins, stablecoins FAQs
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
![Solana revenue hits multi-month lows as Pump.fun competition, Ethervista, launch on Ethereum](https://editorial.fxstreet.com/images/Markets/Currencies/Cryptocurrencies/Solana/solana_XtraSmall.jpg)
Solana revenue hits multi-month lows as Pump.fun competition, Ethervista, launch on Ethereum
Solana's (SOL) daily revenue hit a six-month low on Monday, accompanied by a drop in its daily transaction volume. The rapid decline reflects a drop in trader interest following the launch of Pump.fun competitors Ethervista on Ethereum and SunPump on the Tron blockchain.
![Ethereum exchange reserve increased by 163K ETH in five days amid price consolidation](https://editorial.fxstreet.com/images/Markets/Currencies/Cryptocurrencies/Coins/Ethereum/ethereum_XtraSmall.jpg)
Ethereum exchange reserve increased by 163K ETH in five days amid price consolidation
Ethereum (ETH) is down over 2% on Tuesday following an indication of selling pressure due to an uptick in its exchange reserve. However, other on-chain metrics indicate mixed investor sentiment amid ETH's price consolidation.
![XRP breaks past key resistance, Ripple announces plans for Ethereum-compatible smart contracts](https://editorial.fxstreet.com/images/Markets/Currencies/Cryptocurrencies/cryptos_XtraSmall.jpg)
XRP breaks past key resistance, Ripple announces plans for Ethereum-compatible smart contracts
Ripple (XRP), a cross-border payment remittance firm, made several key announcements in Japan and Korea on September 3. One of the key announcements was the plan for an Ethereum-compatible sidechain on the XRP Ledger.
![Bitcoin recovery faces challenge at key resistance zone, gains likely temporary](https://editorial.fxstreet.com/images/Markets/Currencies/Digital%20Currencies/Bitcoin/Bitcoin_Book_XtraSmall.jpg)
Bitcoin recovery faces challenge at key resistance zone, gains likely temporary
Bitcoin (BTC) trades at around $59,000 on Tuesday after a slight recovery the day before. However, this rebound might be short-lived as it nears a crucial resistance barrier. Institutional interest is growing, driven by VanEck’s optimistic Bitcoin forecast, a strategic partnership between Metaplanet and SBI VC Trade, and increased wallet holdings.
![Bitcoin: Will BTC continue its ongoing decline?](https://editorial.fxstreet.com/images/Markets/Currencies/Digital%20Currencies/Bitcoin/bitcoin_5_XtraSmall.jpg)
Bitcoin: Will BTC continue its ongoing decline?
Bitcoin (BTC) trades above $59,000 on Friday, but it has lost 7.5% this week so far after being rejected around the daily resistance of $65,000. The decline is supported by lower demand from the US spot Bitcoin ETFs, which registered a net outflow of $103.8 million, falling Bitcoin's Coinbase Premium Index, and a spike in Network Realized Profit/Loss.
![Moneta Markets review 2024: All you need to know](https://editorial.fxstreet.com/images/IT/Testing/Review/FXSBadgeCertifiedBackg_XtraSmall.png)
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.