In this illustration taken on May 26, 2020, a representation of the virtual currency bitcoin is placed on a dollar bill.
Dice Ruvic | Reuters
Cryptocurrencies fell along with stocks on Wednesday as investors worried about the debt ceiling and the Federal Reserve’s next move.
bitcoin Bitcoin fell more than 3 percent to $26,207.42, according to Coin Metrics. ether About the same amount was lost, trading at $1,787.17.
The move coincided with a drop in U.S. stocks. The Dow Jones fell nearly 300 points, while the S&P 500 and Nasdaq Composite each lost about 1%.
On Wednesday, Speaker Kevin McCarthy said debt ceiling talks were still hanging over spending levels — eight days before the US faces the risk of default. He also said he believed the negotiating team could make progress on Wednesday.
“Markets opened sharply lower after yesterday’s sharp drop, so this could be a reaction to that,” said David Wells, CEO of Enclave Markets. Trading hours add a lot of volume, so sometimes big moves in crypto are followed by big macro-driven moves in stocks.”
Bitcoin is starting to behave like a risk-on asset again, just as it started trading in tandem with gold earlier this year, as investors focus on ongoing debt-ceiling talks in Washington and rising investor expectations for rate hikes.
Bitcoin and ethereum are on track for their worst month of 2023, down 10% and 6%, respectively. Bitcoin fell nearly 8% this quarter after rising 71% in the first quarter. Ether fell 2 percent after rising 52 percent in the first quarter.