Bitcoin and other cryptocurrencies took a steep dive on Thursday, sending ripples throughout the financial markets as revised U.S. economic data raised questions about the potential for near-term interest rate cuts. The chain reaction began with the U.S. government’s announcement that the economy grew at an annualized rate of 3.8% in the second quarter. This figure, up from an earlier estimate of 3.3%, surpassed the initially reported 3% and painted a picture of a robust economic landscape that few had anticipated.
Economic Data Upsets Rate Cut Hopes
The revised GDP figures, coupled with unexpectedly low initial jobless claims of 218,000—down from 232,000 the previous week—have cast doubt on the likelihood of the Federal Reserve reducing interest rates next month. The CME FedWatch tool now reflects a heightened probability, at 17%, that the Fed will maintain current rates, a significant increase from just 8% a day prior. As a result, the 10-year U.S. Treasury yield shot up to nearly 4.20%, its highest level in three weeks, which contributed to a broad sell-off in U.S. stocks, although the Nasdaq managed to trim its losses to 0.5%.
Bitcoin and Major Cryptos Tumble
In the wake of these developments, Bitcoin (BTC) found itself sliding below the $111,000 mark, dipping to its lowest price since early September before clawing back slightly to $111,500. This represents a 1.6% decline over the past 24 hours. Ethereum (ETH) also faced headwinds, falling below $4,000 and experiencing a 4.5% drop during the same period. Other cryptocurrencies like Solana (SOL), Dogecoin (DOGE), Avalanche (AVAX), and Sui (SUI) suffered even sharper declines, mirroring the shaken confidence across the digital asset landscape.
Ethereum’s recent performance has been particularly notable, as the ETH/BTC ratio has flattened year-to-date after being up 20% just a month ago. Solana, which had been riding a wave of enthusiasm due to new digital asset treasury ventures and increased corporate adoption, saw its value drop 6% over the past 24 hours and nearly 20% over the last week.
Crypto Stocks Plunge
The turbulence in the crypto market extended to stocks related to the sector, with companies like MicroStrategy (MSTR), the largest corporate holder of Bitcoin, seeing a 4.5% decrease. Crypto exchange Coinbase (COIN) wasn’t spared either, falling 4.1%. Miners endured even more pronounced losses; Cipher Mining (CIFR), despite an initial boost from news of a Google AI hosting deal, ended the day down 9.4%. HIVE Digital (HIVE), Bitdeer (BTDR), and Bitfarms (BITF) each plummeted between 6% and 8%.
Circle (CRCL), a prominent stablecoin issuer, also retreated 4.4%, while Galaxy Digital (GLXY) slid 3.7%, perpetuating the downward trend throughout the sector.
Navigating the Volatility
While the downturn has undoubtedly rattled investors, it’s essential to consider the broader economic context. The revised GDP growth suggests a strong economic foundation, which, while potentially delaying rate cuts, indicates resilience in the face of global uncertainties. However, crypto markets, known for their volatility, are particularly sensitive to shifts in macroeconomic indicators and central bank policies.
Industry experts suggest that while the current landscape appears bleak, it could present buying opportunities for those with a long-term perspective. The digital asset market’s history of rapid rebounds and its capacity for innovation shouldn’t be underestimated. Investors are advised to stay informed and cautiously optimistic as they navigate these turbulent waters.
Looking Ahead
As the crypto market continues to grapple with external economic pressures, the coming weeks will be crucial in determining the next steps for both digital assets and related stocks. The Federal Reserve’s upcoming decisions, along with ongoing economic data releases, will likely play pivotal roles in shaping market sentiment.
In the interim, stakeholders in the crypto space are encouraged to monitor these developments closely and consider the potential for strategic adjustments in their portfolios. Despite the current downturn, the underlying technology and broadening acceptance of cryptocurrencies remain formidable forces in the financial world, suggesting that today’s challenges could pave the way for tomorrow’s opportunities.
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
