$280 Billion Wiped from "Magnificent Seven" Tech Stocks
The release of earnings reports on October 25th has resulted in a significant drop in the value of the top seven blue-chip tech firms, known as the "magnificent seven." Apple, Microsoft, Meta, Amazon, Alphabet, Nvidia, and Tesla collectively make up a quarter of the S&P 500 index. Over $280 billion has been wiped from their market cap, sparking concerns of a potential tech recession.
Alphabet's Share Price Falls 9%
Google parent company Alphabet experienced the most significant drop, with its share price falling over 9%. This decline resulted in a loss of $180 billion in market cap, marking Google's worst-performing day since the start of the COVID-19 pandemic in March 2020.
Other Tech Stocks Follow Suit
Amazon, Nvidia, and Meta also saw declines in their share prices, dropping 5.5%, 4.3%, and 4.2% respectively, according to Y Charts. Apple and Tesla experienced less severe falls at 1.35% and 1.9% respectively. Microsoft, on the other hand, was the only one of the seven tech stocks to defy the trend, with its share price rising 3.1% after reporting better-than-expected growth in its Azure business.
Fears of Stock Market Crash and Search Trends
The widespread tech selloff has raised concerns of a potential stock market crash. Google search trends reflect this anxiety, with searches for the term "stock market crash" increasing by 233% over the past week, according to reporter Andrew Lokenauth.
Crypto Market Trends Upwards
While tech stocks face turbulence, the cryptocurrency market has been trending upwards. Optimism over possible spot Bitcoin ETF approvals in the United States has contributed to a 16.3% increase in overall market cap, reaching $1.3 trillion over the last week, according to CoinGecko. Bitcoin (BTC), Ether (ETH), Binance Coin (BNB), and XRP have experienced notable gains of 23.3%, 16.7%, 8%, and 15.2% respectively in the past seven days.
Crypto Market's Response to Macroeconomic Conditions
Although the crypto market has shown resilience, it is not immune to challenging macroeconomic conditions. When the United States real gross domestic product declined in the first two quarters of 2022, the cryptocurrency market cap fell by 61.7%, dropping from $2.37 trillion to $907 billion, according to CoinGecko.
Bitcoin's Relationship with Tech Stocks and the S&P 500
Analysts are debating whether Bitcoin will decouple further from tech stocks and the S&P 500. Previous research suggests that Bitcoin tends to trade similarly to a "tech stock" in the long term due to its extreme volatility. However, the Multidisciplinary Digital Publishing Institute has found that Bitcoin can serve as a viable hedge against the U.S. dollar, as it is negatively correlated to the currency, according to a report from October 2022.
"Flight to Safety" Towards Bitcoin
Recent investor movements have led some observers to suggest that Bitcoin could be seen as a "flight to safety," particularly considering the recent decline in banking stocks. As uncertainties persist in the tech market, Bitcoin may attract investors seeking stability and potential returns.
Joe Lubin - The Truth About ETH Founders Split and 'Crypto Google'
In other cryptocurrency news, there has been speculation surrounding the split among Ethereum founders and the emergence of what some are calling a "Crypto Google." Stay tuned for more updates on this developing story.
