In this illustration dated May 26, 2020, representations of the virtual currency Bitcoin are placed on US dollar banknotes.
Dado Ruvic | Portal
Cryptocurrencies fell with stocks on Wednesday as investors worried about the debt ceiling and the Federal Reserve’s next move.
Bitcoin fell more than 3% to $26,207.42, according to Coin Metrics. Ether lost about the same amount to trade at $1,787.17.
The move coincided with a fall in US stocks. The Dow Jones lost nearly 300 points, while the S&P 500 and Nasdaq Composite each fell about 1%.
On Wednesday, spokesman Kevin McCarthy said the debt ceiling negotiations were still contingent on spending levels – there were eight days before the US was at risk of defaulting. He also said he believes negotiating teams could make progress on Wednesday.
“Markets opened quite weak after falling sharply yesterday, so this could be a reaction to that,” said David Wells, CEO of Enclave Markets. “Although crypto is a global market, volumes increase significantly during US trading hours, sometimes leading to large crypto moves following large stock moves that are macro-driven.”
As investors eye ongoing debt-ceiling negotiations in Washington and investor rate hike expectations mount, Bitcoin is again behaving like a risky asset just as it began trading more closely with gold earlier this year.
Bitcoin and Ether are on course for their worst month of 2023, down 10% and 6% respectively. Bitcoin is down nearly 8% for the quarter after ending the first quarter up 71%. Ether is down 2% after posting a 52% surge in the first quarter.