$1 Trillion Dump Of Major Tech Stocks Is 12 Times The Entire Bitcoin Market Cap
The crypto market is still processing this week’s meltdown that sent Bitcoin prices to the floor hitting its lowest mark in over a year.
While Monday’s sell-off may have caught many investors by surprise, the same cannot be said of the general stock market performance in the year, which has been on a downturn.
Even as crypto grapples with the potential impact of the Bitcoin Cash standoff, a similar sell-off in the Dow (not a meltdown per se), has seen the traditional stock market post significant losses.
The big five tech stocks, commonly abbreviated FAANG, have collectively lost more in the year, comparatively higher than the cryptocurrency market since its peak in 2017.
Traditional markets wipe off 2018 gains
Like the digital asset market, the conventional markets hit its latest downturn on Tuesday, meaning that Dow Jones Industrial Average (the Dow), the Standard & Poor’s 500 (S&P 500), and Nasdaq have lost all of 2018’s gains.
The Wall Street sell-off has hit the FAANG stocks harder, with stock prices for Facebook, Amazon, Apple, Netflix, and Google (Alphabet) quickly creeping into a bearish trend. These stocks have lost over 20 percent of their value since hitting their yearly high
In total, a remarkable decline has seen the FAANG market lose more than $1 trillion in value in the last four months, beginning the rot at the beginning of quarter three.
FAANG’s losses over the 52-week period have seen the five stocks shrink their market capitalization by $253 billion, $280 billion, $253 billion, $67 billion, and $164 billion for Facebook, Amazon, Apple, Netflix, and Alphabet, in that order.
The top five tech stocks that have dominated Wall Street in the last decade have all cranked above 20 percent to descend into a bear market earlier this week.
Facebook led the pack with a 40.6 percent decline, followed by Netflix at 39.1 percent. Amazon, Apple, and Alphabet all lost 28.9, 24, and 22 percent respectively.
According to Dario Perkins of TS Lombard, such “short-term, unexpected” weaknesses as witnessed in the often strong tech sector may have a significant economic impact, worsening the situation within the dampened macro environment.
As reported by CNBC, Perkins believes that:
“Additional retrenchment in the FAANGs could also undermine the broader US stock market.”
Crypto retracement comparable to FAANG
The nascent cryptocurrency market has experienced a year-long bear market, with losses for most coins hitting over 60 percent since the 2017 bull run.
The latest sell-off that began last week has culminated in BTC prices coming to within a few hundred dollars of $4,000. The market-wide sell-off has left the total cryptocurrency market just above $146 billion, nearly 75 percent down on its YTD performance.
However, there appears to be an uncanny relationship between the crypto decline and what is happening in the tech market.
As Mati Greenspan, an analyst at brokerage firm eToro, points out, recent movements is a result of attempts to steady the market following the 2008 financial crisis.
He added that most of the money injected in the market then ended up in the market, with investors not keen on research regarding the value of assets.
In his view, 2017 saw way too many investments in high-risk assets, particularly digital currencies and tech stocks. But things have changed, and that explains the 2018 retracement.
He, however, said that there is a lot of money out there waiting to get into crypto, with prospective interest capped by concerns about whether assets have hit their bottom or not.
“If things turn around now, it would certainly be a very bullish sign, but it’s also entirely possible that this could last a while longer.”
Bitcoin has recouped a few hundred dollars from yesterday’s sell-off and is now trading at $4,520 against the U.S dollar. BCH, on the other hand, has gained over 11 percent in the last 24 hours.
This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your research and consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.