Why Crypto Stocks Plunged Today
Today's inflation report sent the crypto world reeling as a sell-off hit the entire industry. Headline inflation was 0.1% month over month in August, but core inflation (which excludes energy) was up 0.6%. On a year-over-year basis, overall inflation was 8.3%. The market had rallied in recent days on hope that inflation is slowing, but that doesn't appear to be the case, at least for now.
Three of the big movers in crypto today are Coinbase Global (NASDAQ: COIN), which fell as much as 9.3% and is down 6.6% as of 2:30 p.m. ET; Silvergate Capital (NYSE: SI), which fell 7.4% and is now down 6.4%; and cryptocurrency Solana (CRYPTO: SOL), which is down 7.2% today.
From a trading perspective, the move is pretty simple. Higher inflation likely means the Federal Reserve will increase interest rates for longer than investors were hoping. That results in a lower valuation for assets like stocks, especially growth stocks, and that's why the Nasdaq Composite is down 4.3% today. Crypto values are generally correlated with stocks, which is why crypto valuations plunged today.
Source Fool.com
