Bitcoin Miners Lead Wall Street's Crypto Sell-Off: Why Are They Falling Hardest?

Source Beincrypto

Bitcoin sank to about $68,000 on Friday. That is its lowest price since August. US stocks tied to the coin went down with it.

The companies that mine new Bitcoin took the worst hit. Hut 8 dropped 6%. Riot Platforms and MARA Holdings each lost 3.9%. Coinbase, the largest US crypto exchange, slipped just 0.5%.

Bitcoin Price Performance. Source: TradingViewBitcoin Price Performance. Source: TradingView

Why is Bitcoin Falling?

It started with prices at the shops. US consumer prices rose 0.4% in October, above the 0.3% economists expected, the Bureau of Labor Statistics said on Tuesday.

Traders now bet the Federal Reserve will raise interest rates in December. Higher rates make risky bets like Bitcoin less attractive.

“Given the higher-than-desired inflation, it is even more likely now that the Fed will raise rates in December,” Chris Zaccarelli of Northlight Asset Management said.

Friday brought no relief. Wholesale prices rose 0.3% in October, below forecasts. But the yearly rate climbed to 6.5%, the highest in nearly four years. Wall Street’s early gains vanished within 30 minutes. The S&P 500 slid 0.55% and the Nasdaq 0.64%.

Why Do Miners Fall Harder?

Miners earn in Bitcoin. When the coin drops, so does their income. Power bills and debts do not.

MARA shows the squeeze. Its mining made $30.1 million after direct costs last quarter, against $43.9 million in overheads. About 54% of its Bitcoin is pledged against loans.

Not everyone sees doom. Miners are renting their power sites to artificial intelligence firms. Last week, Riot and Hut 8 each jumped 12% on those hopes while bitcoin stood still.

What Comes Next?

Strategy, the biggest corporate bitcoin holder, faces its own deadline. Index provider MSCI will drop it from its benchmarks after November 30.

JPMorgan analysts estimated that could force about $2.8 billion in selling. Strategy says index funds hold about 13 million shares, less than a day’s trading.

The bigger test is the Fed’s December meeting.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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