Tech stocks drop but bitcoin holds its ground

Every week, Amdax summarizes what’s happening in the crypto market for you. Want to dive deeper? Click on the links (if available) in this article for more insights.

Market update

Stay informed in three steps:

1. Korean stock market in free fall, bitcoin shows stability
The KOSPI fell sharply on Tuesday and continued its decline on Wednesday. SK Hynix reported record results, but revenue and profit came in just below the high expectations, and that was enough to trigger a sharp sell-off. On top of that came persistent concerns about Chinese competition and doubts about the sustainability of AI investments by big tech companies. The Nasdaq is under pressure but is holding up better than the Korean index for now. Bitcoin, meanwhile, is barely moving. It sits around 63,900 dollars and has hardly moved in the past 24 hours. While tech investors around the world are rushing for the exit, bitcoin remains relatively calm. The Fear & Greed Index stands at 29, firmly in fear territory, but the price is holding steady.

2. New Fed rate decision, outcome still uncertain
Today the Federal Reserve wraps up its two-day meeting, with the rate decision due at 8:00 PM CET. About 62 percent of the market expects no change, but the uncertainty is exceptionally high. Under new chair Kevin Warsh, the Fed has scrapped its traditional forward guidance: the market no longer gets any hints in advance. At the previous meeting in June, rates stayed at 3.50-3.75 percent, but the dot plot shifted sharply toward a hike later this year. June's inflation figures came in better than expected, but Warsh told Congress last week that he has no tolerance for persistently elevated inflation. There are no new economic projections with this decision, so everything comes down to the press conference. And that is exactly where Warsh deliberately gives little away.

3. Ondo Finance drops its own blockchain, launches Ondo Network
Ondo Finance, the largest issuer of tokenized US Treasuries with more than 2.5 billion dollars in assets under management, launched Ondo Network on Monday. Not a layer-1 blockchain as previously announced, but an offchain execution layer where orders are executed privately and quickly in secure hardware, with settlement on Ethereum. The first product is Ondo Perps, perpetual futures on tokenized stocks and commodities. Last week, Ondo's broker-dealer also received expanded FINRA approval for regulated trading in tokenized financial instruments in the US.

Ries' take

Markets have not exactly calmed down in recent weeks, yet crypto is remarkably quiet. While crypto is still synonymous with volatility for most people, this week it is exactly the other way around: tech and AI stocks are the new favorites of the risk seeker. As we noted earlier, something like an altseason seemed to be underway in equities, comparable to what we know from crypto in 2017 and 2021. That comparison now seems to hold completely. SK Hynix has dropped more than 50 percent in 30 days, and a broader index of memory chip companies lost around 40 percent. Instead of crypto increasingly behaving like stocks, it looks like stocks have become just like crypto.