bitcoin Price Decline Linked to US Economic Uncertainty and Tech Stock Sell-Off
The price of bitcoin experienced a 4.7% drop on Wednesday, falling below the $57,000 mark. This decline was primarily driven by economic uncertainties in the United States, coupled with a sell-off of tech stocks led by Nvidia. As of 0640 UTC, bitcoin was trading around $56,416.
The US Manufacturing PMI for August 2024, released on Tuesday, came in at 47.2, slightly lower than the expected 47.5. While this figure indicated a slight improvement from July's 46.8, it still highlighted a contraction in the manufacturing sector. The release of this data sparked a broader market sell-off, impacting the price of bitcoin.
Following the publication of the PMI data, major US indices experienced significant declines. The S&P 500 dropped by 2.12%, the Dow Jones Industrial Average fell by 1.51%, and the Nasdaq Composite saw a more pronounced decrease of 3.26%.
The Manufacturing PMI is considered a critical indicator of economic health. Consequently, shifts in investor sentiment triggered by such metrics often have negative repercussions on bitcoin, which is perceived as a high-risk asset. Just a week ago, bitcoin's price was hovering around the mid-$60,000 range.
Nvidia Stock Plummets Amid Antitrust Investigations
Further exacerbating the market downturn was the news that the US Department of Justice had issued a subpoena to Nvidia as part of an escalating antitrust investigation. Concerns have been raised regarding Nvidia's alleged violations of antitrust laws, particularly relating to the company's treatment of customers who do not exclusively utilize its AI chips. Such actions are seen as potentially stifling competition in the AI hardware market.
In response to this development, Nvidia's stock plummeted by approximately 9.5%, resulting in a staggering $278.9 billion loss in market value. This decline marked the most significant single-day value loss for a US-listed stock.
Nvidia Stock Slump Indicates Broader Tech Sector Worries
Nvidia, a prominent GPU manufacturer, is often regarded as a barometer for the technology and AI sectors. Given the use of GPUs in cryptocurrency mining, fluctuations in Nvidia's stock price indirectly reflect trends in the crypto market.
A decline in Nvidia's stock price can signal wider concerns within the tech industry or apprehensions about a potential economic slowdown. Consequently, investors may opt to withdraw from riskier assets such as bitcoin in response to these developments.
