Wall Street Tumbles at Open as Crypto Crashes; Dow Down 410 Pts

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© Reuters.

By Geoffrey Smith 

Investing.com — U.S. stock markets opened sharply lower as a crash in crypto assets – triggered by new regulations announced overnight in China – quickly spread to other risk assets.

With losing 20% in a single session and Ether as much as 40%, stocks seen as proxies for crypto exposure came under heavy pressure. Coinbase Global stock fell over 10% at opening before recovering slightly, while Microstrategy (NASDAQ:) stock fell 11.5% and Square stock fell 3.5%. 

Tesla (NASDAQ:). whose CEO Elon Musk has loudly trumpeted the virtues of crypto assets this year until his repudiation of Bitcoin last week, fell 4.6%. At current levels, Bitcoin is now trading below where Tesla bought it for treasury purposes around the turn of the year. The company had used unrealized profits on its holding to bolster its bottom line in its first-quarter earnings

By 9:40 AM ET (1340 GMT), the was down 417 points, or 1.2%, at 33,644 points. The was down 1.5% and the was down 1.7%.

The slide in crypto assets had begun in the Asian session, when the central bank of China reissued guidance to the financial sector forbidding it from facilitating crypto trading in any way. Given the sizable fines handed down recently to China’s biggest Internet companies. it’s likely that companies such as Tencent  (OTC:) and Ant Group – both of whom were given heavy fines recently for unrelated misdeeds – will comply conscientiously in shutting down a major source of demand for crypto assets. Tencent stock fell 1.4%, while JD.com (NASDAQ:) stock fell 0.4%, despite a strong set of quarterly results that should underpin the planned IPO of its logistics unit later this month.

The popularity of crypto assets with retail traders appeared to have knock-on effects to stocks popular with the same cohort of investors. AMC Entertainment (NYSE:), a favorite of this winter’s ‘meme stock’ rally, fell 7.7% amid hints of forced selling, while GameStop (NYSE:) stock fell 3.4% – albeit that’s a pretty small move for GameStop this year.

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