Crypto stocks took a sharp nosedive Tuesday as investors dumped tech and risk assets after a strong rally last week that had been fueled by growing speculation around interest rate cuts, but that momentum broke hard as traders got spooked by rising uncertainty ahead of Federal Reserve Chair Jerome Powell’s upcoming remarks in Jackson Hole, Wyoming.
Among the hardest-hit names was Galaxy Digital, the crypto financial services firm that cratered by 10%. Coinbase, now part of the S&P 500, gave up over 5%, while eToro fell even further, sliding more than 6%.
Other platforms like Robinhood and Bullish were also dragged down, both dropping above 6%. The risk-off mood didn’t spare the newer corners of the crypto industry either.
Treasury-focused crypto firms get hammered
Inside the growing niche of crypto treasury operations, red flashed across the board. Strategy, a firm that’s been rising fast in the background, tumbled 7%.
SharpLink Gaming, which blends crypto tools with the online sports world, lost 8%. Bitmine Immersion, tied to mining infrastructure, sank 9%. But DeFi Development took the crown for biggest loser of the day, sliding a brutal 13%.
Stablecoins, often considered the calmer end of the crypto space, didn’t escape the damage. Circle, the issuer of USDC and one of the most closely watched firms in the space following its IPO, dropped 4.5%.
That decline hit just days after Circle had basked in regulatory support under the GENIUS Act, which established new rules for stablecoins in the United States.
The pain wasn’t limited to equities. Bitcoin fell nearly 3%, retreating to just over $113,000, while Ether shed more than 5%, falling back to around $4,100, based on data from Coin Metrics. That was a big change from last week, when Bitcoin touched an all-time intraday high near $125,000, driven by speculative enthusiasm.
Powell uncertainty triggers tech retreat
Tech names were broadly under pressure across Wall Street. The Nasdaq Composite dropped 1.46%, ending the session at 21,314.95. The S&P 500 slid 0.59% to 6,411.37.
Nvidia lost 3.5%, while other chipmakers like Advanced Micro Devices and Broadcom were down 5.4% and 3.6%, respectively. Palantir, one of the top performing software names in the last quarter, plunged more than 9%, ending as the S&P’s worst performer of the day.
The Dow Jones Industrial Average avoided the full bloodbath, adding a weak 10.45 points to finish at 44,922.27, but that move came thanks to a lift from Home Depot, which pushed the 30-stock index to a new intraday record during the session.
At the heart of the chaos was rising caution ahead of Powell’s appearance at the Federal Reserve’s Jackson Hole summit. Traders were nervous, pulling out of growth names, and crypto, with its speculative nature, was an easy first exit.
“With Powell speaking at Jackson Hole, we typically see profit-taking ahead of his remarks,” said Satraj Bambra, CEO of Rails, a hybrid crypto exchange. “Any time there’s communication uncertainty from the Fed, you can generally expect some profit-taking as traders de-risk their positions.”
In the last few months, crypto stocks had benefited from a string of bullish headlines. Coinbase’s entry into the S&P 500 gave it institutional exposure. Circle’s IPO added legitimacy to stablecoins. The GENIUS Act, which became law, created new clarity around digital tokens. But the mood has changed in August, as investors brace for more clarity or confusion out of the Fed.
