US stocks lose $1.25T in one day – more than the entire crypto market cap
Bitcoin (BTC) and altcoins lost heavily on August 26 after the US Federal Reserve delivered hawkish comments on economic policy.
Across the board, risk assets took a big hit — US stocks lost about $1.25 trillion in a single session.
Analyst: Powell backs off ‘soft landing’ rhetoric
As comments by Fed Chairman Jerome Powell suggested that bigger rate hikes were still on the table despite recent data that suggested inflation was already slowing, investors rushed to cut risks.
“Restoring price stability will likely require maintaining restrictive policy for some time. The historical record strongly cautions against premature policy loosening,” Powell said at the annual Jackson Hole Economic Symposium.
The S&P 500 closed down 3.4% on the day, hitting its lowest levels since late July. The Nasdaq Composite Index copied the move and extended losses, shedding 4%.
Overall, the US stock market lost more value than the entire market cap of Bitcoin and altcoins combined.
The crypto market capitalization itself fell from $1.029 trillion to $936.87 billion at one point overnight, representing a drop of 8.95%, according to data from Cointelegraph Markets Pro and TradingView.
While some argued that Powell’s words were not the essential area to consider in terms of future Fed policy, others noted that previous narratives were slowly being abandoned when it came to the inflation outlook.
Stop focusing on what JAYPOW says and focus on what he does. pic.twitter.com/tGf82VPkGF
— Arthur Hayes (@CryptoHayes) 26 August 2022
Holger Zschaepitz, popular market commentator for the German media publication Die Welt, considered the speech to have hit “all the hawkish notes” while Powell “skipped the dove ones”.
“The hawkish moves were his recognition of the pain that is likely to be needed to reduce inflation – no more soft landing, the indication that rates need to be taken above neutral,” he added in sections of Twitter comments.
Powell also said the decision on how far to extend key interest rates in September would “depend on the totality of incoming data and the outlook.”
The latest readings from CME Group’s FedWatch tool, meanwhile, showed the majority consensus favoring a 75 basis point hike in September, mirroring the July move.
No hodle can hide the pain
However, for crypto investors, there was no way to avoid the immediate impact of the risk asset route.
Related: Price Analysis 8/26: BTC, ETH, BNB, XRP, ADA, SOL, DOGE, DOT, SHIB, MATIC
BTC/USD lost up to 8.8% at one point, falling below the $20,000 mark for the first time since July 14 before recovering to linger just above the significant line in the sand.
For altcoins, the picture was no less dire. Ether (ETH), the largest altcoin by market cap, saw intraday losses approaching 14%.
ETH/USD circled $1,500 at the time of writing on August 27, erasing an entire month of gains. Among the price tags was a new warning from popular trader Crypto Ed, who looked at a possible further leg.
“Could fall to $1,200-1,300 before any significant bounce,” part of his last Twitter update read.
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