Asia Market Open: Crypto Declines, Global Stocks Face Pressure

Good morning, Asia! Let's take a look at the market movements as we gear up for the day ahead.

As trading commenced on Friday, a risk-averse sentiment permeated Asia’s markets, with cryptocurrency values and key regional stock indices experiencing declines. This cautious approach from investors stems from growing concerns surrounding the global economic landscape.

Bitcoin, along with other cryptocurrencies, continued its downward trajectory, extending the losses seen this week. Recent data highlighted a downturn in demand and decreasing treasury inflows from significant holders, contributing to the bearish trend.

In early trading, the total market capitalization of cryptocurrencies fell by approximately 2%, reflecting the overall sentiment seen in the equity markets.

In regional markets, Japan’s Nikkei 225 saw a decline of 1.75%, while Hong Kong’s Hang Seng Index decreased by 0.74%. The Shenzhen Component fell by 0.76%, and the Shanghai Composite dipped 0.22%.

On a slightly brighter note, New Zealand’s Dow Jones NZ recorded a minor gain of 0.20%, reaching 360.52, making it the only major index to show an upward movement.

These downturns in Asia followed a notable retreat on Wall Street, where the Dow Jones Industrial Average dropped by 0.84%, the S&P 500 fell 1.12%, and the Nasdaq Composite lost 1.9%. This decline was primarily attributed to a steep selloff in technology and artificial intelligence-related stocks, which had previously driven market rallies.

Really feels like equities are cooked, and if equities are cooked, then our coins are about to get smacked

This week’s selloff coincided with the conclusion of earnings season, prompting investors to focus on private data to assess economic health amidst the ongoing U.S. government shutdown.

Recent statistics from Challenger, Gray & Christmas revealed that 153,074 job cuts were announced in October, nearly tripling last year’s figures for the same month, primarily driven by the technology and warehousing sectors.

According to Thomas Perfumo, a global economist at Kraken, the demand for digital asset treasuries, such as MicroStrategy, which had propped up the cryptocurrency market during the summer, has significantly diminished.

Perfumo noted, “Crypto ETFs have also seen considerable outflows, despite exhibiting bullish trends during previous months of volatile price movements.”

He added, “While the market was stabilizing following the liquidation event on October 10, this latest ‘reset’ has certainly diminished short-term risk tolerance further. This is evident in the ongoing retreat of altcoins in favor of Bitcoin, which has once again increased its market cap dominance.”

Investor confidence remains tenuous due to the unprecedented duration of the U.S. government shutdown, which has halted the release of critical official data, including non-farm payroll figures. This uncertainty is contributing to increasing pressure on market valuations and complicating the overall economic picture.