Cryptocurrencies and Crypto-Linked Stocks Slump Amid Traders' Concerns About Economy

Investors are bracing themselves for a potentially tumultuous market as cryptocurrencies and crypto-linked stocks have reportedly slumped alongside the S&P 500 Index amid traders' concerns about a global trade war and a possible recession. According to Bloomberg, Bitcoin has lost more than 10% of its value and Ether has lost more than 45% since the beginning of the quarter, marking a sharp decline from their record highs earlier in the year.

The four crypto industry stocks – Coinbase, Riot Platforms, Core Scientific, and Galaxy Digital – have dropped below their pre-election levels, with some of them plummeting to depths not seen since before President Donald Trump's election in 2016. This sudden downturn has left investors questioning whether the optimism surrounding Trump's election was premature.

In a surprising turn of events, the price of Bitcoin had hit a record high on the day of Trump's inauguration, with many crypto enthusiasts hoping that his presidency would bring about a new era of regulatory clarity and growth for the industry. However, it seems that these hopes have been dashed by Trump's trade wars and their impact on the global economy.

According to Bloomberg, the drop in Bitcoin's value is attributed to Trump's trade wars unsettling the larger economy, as well as his actions on crypto falling short of crypto enthusiasts' expectations. While Trump created a strategic reserve of bitcoin, he did not authorize the use of taxpayer money to expand it, leaving many investors feeling frustrated and disappointed.

While some traders consider Bitcoin to be "digital gold," its recent decline has failed to live up to this reputation. In contrast, gold has had its best quarterly return since 1986, according to Bloomberg's report. The decline in cryptocurrency markets is not solely due to issues around crypto itself, however, as concerns about the economy have also driven the S&P 500 Index to what may be its worst quarter since mid-2022.

In an earlier report, it was revealed that the global cryptocurrency markets had lost more than $800 billion in recent weeks as enthusiasm for crypto began to fade. Traders were frustrated with Trump's slow pace in implementing his campaign promises and worried about the record hack of the Bybit cryptocurrency exchange, which had left many investors feeling anxious.

Before their recent downturn, cryptocurrencies and crypto-linked stocks had surged in value at the beginning of the year on the back of optimism surrounding Trump's election. Investors had expected a more favorable regulatory environment and greater clarity around the future of cryptocurrency, but it seems that these expectations have not been met.

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