Wall Street tumbles, with tech leading the way. Bitcoin’s drop takes crypto stocks with it.
Tesla was one of the worst performing stocks in the market on Wednesday, falling more than 4 percent. The company had once positioned itself as a prominent proponent of cryptocurrencies, announcing in March that it would accept Bitcoin in exchange for cars in order to spark a surge in the asset.
Last week, Elon Musk, the company’s executive director, overturned that decision, citing concerns about the energy consumption required to produce cryptocurrencies. This process, known as mining, uses computers to create new bitcoin by solving complex computational problems.
Hard drive maker Seagate Technology, which has a stake in cryptocurrency company Ripple, the inventor of the XRP currency, fell more than 2 percent. Stocks of Seagate and Western Digital, another hard drive maker, have been in jeopardy in recent days as analysts highlighted rising demand for its computer products, some from cryptocurrency miners. Western Digital was down nearly 3 percent.
Bitcoin wasn’t the only element moving the markets. Crude oil fell around 4 percent as concerns remain that the still-spreading coronavirus could lead to new restrictions that could limit economic activity in India, as well as Thailand, Vietnam and Taiwan.
The Stoxx Europe 600 index fell 1.5 percent while the UK’s FTSE 100 fell 1.3 percent. Asian equity markets ended the day mostly lower, with the Nikkei in Japan falling 1.3 percent.
The volatility in the stock markets has recently been driven by sentiment towards inflation. Investors are nervous that a price jump – If the world economy reopens and the government continues to pump economic funds to stimulate growth, it could push the Federal Reserve and other central banks to raise interest rates or take other measures to cool growth. That would be bad news for riskier investments like stocks.
The Fed and other central banks have stated that they view the recent hikes as temporary, partly due to problems in the supply chain as economies recover from lockdowns, and that they have no plans to remove emergency aid to the economy.
Federal Reserve policy makers will release the minutes of their April meeting on Wednesday.