Crypto fell with stocks on Wednesday as investors worried about the debt ceiling and the Federal Reserve’s next move.
Bitcoin fell more than 3% to $26,207.42, according to Coin Metrics. Ether lost about the same amount and was trading at $1,787.17.
The move coincided with a drop in U.S. equities. The Dow was down nearly 300 points while the S&P 500 and Nasdaq Composite fell about 1% each.
On Wednesday, Speaker Kevin McCarthy said debt ceiling talks are still hung up on spending levels – with eight days to go until the U.S. is at risk of a default. He also said he believes the negotiating teams could make progress Wednesday.
“Markets opened quite down after being down significantly yesterday, so this could be a reaction to that,” said David Wells, CEO at Enclave Markets. “Even though crypto is a global market, volumes pick up quite a bit during U.S. trading hours, so sometimes big crypto moves are following big equities moves that are macro driven.”
As investors monitor the ongoing debt ceiling negotiations in Washington and investors’ rate hike expectations move up, bitcoin has started behaving like a risk asset again, just as it was starting to trade more in tandem with gold earlier this year.
Bitcoin and ether are on pace for their worst month of 2023, down 10% and 6%, respectively. Bitcoin is down almost 8% for the quarter, after finishing the first quarter up 71%. Ether is down 2%, after it posted a 52% gain in Q1.