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Cryptocurrencies fell sharply on the first trading day of August, as investors reacted to economic data that heightened concerns about the U.S. economy. The sell-off affected major cryptocurrencies and crypto-related stocks.
Market Performance:
- Bitcoin: Dropped over 3.7%, trading at $63,144.00, according to Coin Metrics. The leading cryptocurrency has been volatile, trading within a range of $55,000 to $70,000 since March, when it reached an all-time high above $73,000.
- Ether: Fell 5% to $3,099.10, following a similar downward trend.
Impact on Crypto Stocks:
- Coinbase: Declined by 5%.
- MicroStrategy: Fell by 6%.
- Marathon Digital: Dropped 7%.
- Riot Platforms: Lost 5.5%.
The decline in cryptocurrency prices and related stocks was driven by a series of disappointing economic indicators released on Thursday. These included:
- July Manufacturing Activity: Fell by 1.7 percentage points from June.
- Unemployment Insurance Filings: First-time claims increased and exceeded estimates.
- Announced Layoffs: July saw the highest number of layoffs for that month in over two decades.
The economic data contributed to investor fears that the U.S. economy could be headed towards a recession. This uncertainty has led investors to move away from riskier assets, including cryptocurrencies.
Market Outlook: August is typically a slow month for cryptocurrencies and risk assets in general, and Thursday’s losses nearly wiped out Bitcoin’s 5.04% gain for July. Despite the recent volatility, Bitcoin remains up over 48% for the year. Many investors are optimistic that it will surpass its previous all-time high in the second half of the year.