$1.05 trillion loss on the stock market puts Bitcoin’s stability to the test

In just one day, the US stock market lost $1.05 trillion. This drop is one of the largest in recent times and reflects a combination of unsatisfactory economic data and enormous difficulties among major companies.

Investors are understandably nervous because this downturn raises some very disturbing questions about the stability of this market.

Stock market: economic data drives the fall

The Dow Jones Industrial Average plunged more than 626 points in the first few seconds of trading. By the close, it had lost more than 700 points and was down more than 2% at around 40,936.93 points.

This sell-off was catalyzed by weak manufacturing data, the fifth consecutive month of contraction. Investors were taken aback by this news, and that ultimately led to sell-offs across the board.

The S&P 500 also lost about 2.4%, closing at around 5,530 points. Technology stocks were hit the hardest in this period, especially Nvidia, whose shares fell 9.5%. This is the biggest single-day drop in the stock of any US company, wiping out a staggering $279 billion from its market value.

Crude oil fell to $72.66 a barrel, reflecting fresh concerns about global demand and adding to market woes.

The value of the US stock market lost $1.05 trillion today. Cryptocurrencies remained relatively stable. image.twitter.com/mO6xdCGkni

—MartyParty (@martypartymusic) September 3, 2024

Nasdaq, the most affected

The Nasdaq Composite was the weakest among the major indexes, falling nearly 3.5% to 17,136.30 points. It was its worst day since early August. Because the Nasdaq is overweight in technology stocks (even more so after the collapse of Nvidia), it suffered heavy losses.

As tech stocks continue to fall, investors are left guessing how much longer this can last and what it could mean for the broader market.

Image: Daily Sabah

Impact on cryptocurrencies

Interestingly, as the stock market spiraled out of control, Cryptocurrencies Like Bitcoin and Ethereum, they remained somewhat resilient. Bitcoin lost 3% of its value, while Ethereum fell below $2,500.

History also shows that September has been the most challenging month for stocks and cryptocurrencies. There is typically higher volatility from traders preparing for monthly economic reports and interest rate changes.

BTC market cap currently at $1.16 trillion. Chart: TradingView.com

Bitcoin market cap remains stable

Despite the recent downturn, Bitcoin’s market cap is still healthy at around $1.2 trillion, with a year-over-year return of 128%.

The short-term outlook is rather bleak, but some analysts are cautiously saying there could be a recovery. Their optimism is based on the upcoming US elections and the expected disbursement of $14.5 billion to FTX creditors.

However, it all depends on what is reported in future economic data. If negative reports continue, more suffering may be on the way.

But what really highlights a greater magnitude of uncertainty is the $1.05 trillion loss that the US stock market has had to endure. As investors try to overcome the ramifications of weak economic data and major declines in key companies, all eyes are on the next round of reports and political developments to be released.

Obviously, some feel that we have hit rock bottom, but there are challenges ahead and no one knows how long it will really take for this sector to dig out of this hole.

Featured image from TipRanks, chart from TradingView