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Bitcoin and other assets experienced market drops in premarket trading on Monday, responding to several serious factors such as the COVID pandemic.
The price of Bitcoin dropped by 9% on Monday as investors brace for an equity market decline. Even though many people view it as a safe haven asset, Bitcoin sometimes follows trends in other markets, including traditional climes.
In addition, the price of the major crypto also tends to experience a September dip, much like stocks. BTC is currently trading at $43,095 at press time, reflecting an overall decline across the broader crypto market. For instance, Ether, the second-largest crypto by market cap, is down by about 10% to $2,999.
The general drops in the Bitcoin market and those of other assets come as stablecoin regulation uncertainty heightens. According to a weekend report by the New York Times, The Financial Oversight Council may declare stablecoins systemically risky. If this is the case, then the tokens and their operators will likely come under heavy regulation. The Fed plans to issue a critical report on digital currencies that may cover stablecoin risks. The governing institution will most likely do this once the President’s Working Group on Financial Markets concludes its stablecoin findings.
Amid the ongoing underperformance of the assets markets, investors also seem to be keen on the Federal Reserve’s next move. They want to know whether the US central banking system will indicate its readiness to discontinue the disbursement of stimulus checks. The Federal Reserve plans to hold a two-day meeting beginning on Tuesday.
Apart from investor worry over the government’s position on monetary stimulus, there are other reasons for the sweeping market sell-off and assets decline. Firstly, there is the fear of the underwhelming China property market making inroads into the general financial market. There is also the rise in the number of COVID cases, stemming from the delta variant spread as Autumn approaches in North America. Finally, investors harbor concerns about the fast-approaching debt ceiling deadline and the government’s brinkmanship in handling the issue.
Outside Bitcoin Price, Futures Market Also Drops Across Major Indexes
The decline in US stock futures saw many of the indexes underperforming early on Monday. For instance, futures on the Dow Jones Industrial Average dropped by 650 points or 1.9%. Furthermore, there was a futures decline in the S&P 500 and Nasdaq 100 indexes of 1.7% apiece. The Dow and the S&P now look set for their worst daily performances if the declines persist after the open. The last time this happened for the former was July 19th, and for the latter, May.
The stocks most affected in premarket trading were those linked to global growth. Ford Motor Company (NYSE: F) and Carrier Global were each down by over 3%. In addition, General Motors (NYSE: GM) and Boeing Co (NYSE: BA) dipped 2%. Finally, Nucor steel had a 2.8% drawdown. Stocks of leading banks like Bank of America (NYSE: BAC), and JPMorgan Chase (NYSE: JPM) were also down 2%.
Stocks of energy-producing corporations also plummeted. Occidental Petroleum, Hess, and Devon Energy suffered some of the biggest drawdowns in premarket trading. WTI crude also fell by about 2%.
Conversely, as several company stocks took a dive, bond prices gained as investors opted for safety. This resulted in the ten-year treasury yield going down by 4 basis points to 1.329%.