The cryptocurrency market faced a harsh reality check this week, with Bitcoin plummeting from its October highs. Once soaring near $125,000, the world’s largest cryptocurrency dropped to approximately $85,500, a decline of roughly 6% in just 24 hours. This “risk-off” sentiment rippled through crypto-related stocks, dragging Coinbase Global down 4.8% and Robinhood Markets down 4.1%, as investors reacted to rising bond yields which make speculative assets less attractive.
This bearish mood originated on Wall Street, where U.S. stocks gave back recent gains. The S&P 500 slipped 0.5%, closing at 6,812.63, while the industrial-heavy Dow Jones lost 0.9%. However, Asian markets refused to follow the U.S. lead. On Tuesday, benchmarks in Tokyo, Seoul, and Hong Kong mostly advanced. The Nikkei 225 added 0.5%, and the Kospi in South Korea jumped 1.5%, proving that Asian investors were focused on local catalysts rather than Wall Street’s hangover.
One of those local catalysts is the changing monetary policy in Japan. With inflation now holding above the 2% target, the Bank of Japan is hinting at a rate hike. While this spooked bond markets, it boosted Japanese financial shares. Meanwhile, in the corporate world, contrasting fortunes were on display. While crypto struggled, tech hardware shined; Nvidia swung to a gain of 1.6%, and Synopsys rallied 4.9% on news of an expanded partnership.
Traditional industries faced their own headwinds. In Europe, Airbus stock tumbled 5.8% after a software glitch affected its A320 fleet, causing travel disruptions and forcing emergency updates. This dragged the French CAC 40 index down, further highlighting the divergence between the struggling European and American sessions and the resilient Asian session.
Looking ahead, the market’s direction seems to hinge on the U.S. consumer and the Federal Reserve. Despite economic uncertainty, spending during Black Friday and Cyber Monday is expected to beat expectations. If the Fed follows through with a rate cut next week to support the slowing job market, it could provide the floor that risky assets like Bitcoin and tech stocks need to stabilize.