In the early morning of February 28th, although investors believed they had successfully weathered the earnings report of Nvidia, the remarks of U.S. President Trump once again triggered violent market fluctuations. U.S. stocks encountered a new round of sell-offs, with the S&P 500 index falling 1.59% to close at 5,861.57 points; the Nasdaq Composite Index fell 2.78% to 18,544.42 points; the Dow Jones Industrial Average fell 0.45% to close at 43,239.5 points.
This plunge affected the symbols of the U.S. stock market bull run - the "seven giants" companies, with their total market value evaporating about $550 billion (about 4 trillion yuan). Among them, Nvidia's share price fell more than 8% from the opening price, with a market value shrinkage of more than $270 billion, the largest single-day market value loss since January 27.
In Nvidia's latest earnings report, fourth-quarter revenue and profits both exceeded market expectations, and the company also issued strong performance guidance, indicating continued growth in demand for AI chips. However, despite the company's strong performance, the decline in gross profit margin and the slowdown in the growth of data center revenue failed to ignite market sentiment.
James Demmert, Chief Investment Officer of Main Street Research, pointed out that although Nvidia's performance was outstanding, the current market environment is exceptionally turbulent.
In addition to Trump's statement on tariffs, the initial jobless claims data released on Thursday also deepened market concerns about the U.S. economic outlook. The Labor Department reported that the number of Americans filing for unemployment benefits rose to 242,000 in the week ending February 22, up 22,000 from the previous week.
At the same time, retail sentiment has also undergone significant changes. According to the latest survey by the American Association of Individual Investors, more than 60% of respondents believe that U.S. stocks will fall in the next six months, an increase of 20% from the previous week. Against the backdrop of U.S. stocks nearing historical highs, the pessimistic sentiment of retail investors has further increased market uncertainty.
Crypto-related stocks also suffered heavy losses
Crypto-related stocks also experienced a severe setback, according to Snowball data, among the 14 crypto stocks listed in the U.S., 11 fell, and only 3 rose.
Particularly for Coinbase, although the financial report released on February 13 showed a good performance outlook for 2024, the stock price has still accumulated a decline of more than 30% in the past three weeks.
In addition, Microstrategy also fell nearly 9% in the early morning today, with a decline of more than 30% in the past three weeks.
The cryptocurrency market has also been severely hit, with Bitcoin falling from a high of $87,000 to $82,700, while Ethereum hit a new low of $2,230.
The overall cryptocurrency market capitalization has fallen from $3 trillion to the current $2.9 trillion, a loss of $100 billion.
Over the past 24 hours, the total amount of contract liquidations on the network has exceeded $332 million, continuing to be borne by the long positions. Over the past 5 days, the cumulative liquidation funds have exceeded $4 billion.
The current Fear & Greed Index is 12, a new low since June 2022. The market sentiment is in a state of extreme fear, and investors are full of concerns or uncertainties about the future price trend.
Why has Bitcoin been declining recently?
Trade war concerns lead to Bitcoin price decline
Although the U.S. government is strongly promoting Bitcoin policy, Bitcoin prices have fallen in the context of increasing market uncertainty, which seems to be at odds with expectations. Typically, in times of economic uncertainty, cryptocurrencies like Bitcoin are often seen as high-risk assets, and are therefore affected by factors such as geopolitical tensions and tariff threats. Particularly in the context of trade war concerns, the market is generally in a state of panic, and investors are turning to safe-haven assets. Although the U.S. government overall supports digital currencies, Bitcoin, with its high volatility, has lost its upward momentum in the current market environment.
The outflow of Bitcoin ETFs highlights the doubts of institutional investors
Further complicating the situation is the massive outflow of funds from Bitcoin ETFs. According to Sosovalue data, Bitcoin has experienced net outflows for more than 7 consecutive days, with a single-day outflow amount reaching a record high of $1 billion, and Bitcoin ETFs have seen net outflows of more than $2.4 billion in the past week. These withdrawal actions reflect the general uncertainty of institutional investors about the short-term market trend.
The SEC's withdrawal of cases may signal changes in crypto policy
The U.S. Securities and Exchange Commission (SEC) recently withdrew enforcement cases against major crypto platforms like Coinbase and MetaMask, indicating a change in regulatory strategy under the new leadership. SEC Acting Chair Mark Uyeda and crypto supporter Hester Peirce played a key role in driving this change. Coinbase's Chief Legal Officer Paul Grewal said the company will continue to work with regulators to promote positive development in the crypto industry.
The crypto industry is confident in clear legislation
Overall, the crypto industry is optimistic about clear regulatory legislation. For example, the crypto legislation proposed by Senators Cynthia Lummis and Kirsten Gillibrand may lay the foundation for market growth and help the U.S. maintain a leading position in the global crypto field. Although Bitcoin prices continue to be affected by global economic and geopolitical factors, the complex relationship between trade wars and cryptocurrencies remains a major challenge for the market. The U.S. government's support for Bitcoin may bring long-term benefits, but the economic pressures in the short term may still have an impact on investor sentiment.
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