Over $280 billion has been lost from the market value of the top seven technology stocks, raising concerns about a potential tech recession. These stocks, referred to as the “magnificent seven,” include Apple, Microsoft, Meta, Amazon, Alphabet, Nvidia, and Tesla, which together account for a quarter of the S&P 500 index.
Alphabet, the parent company of Google, experienced the biggest decline, with its share price falling over 9%. This resulted in a loss of $180 billion in market capitalization, marking Google’s worst-performing day since the start of the COVID-19 pandemic in March 2020. Other tech giants such as Amazon, Nvidia, and Meta also saw their share prices drop by 5.5%, 4.3%, and 4.2%, respectively.
Apple and Tesla fared slightly better, with their share prices declining by 1.35% and 1.9%, respectively. However, Microsoft was the only company among the seven to see an increase in its share price, rising by 3.1% due to better-than-expected growth in its Azure business.
The widespread selloff of tech stocks has caused the S&P 500 to hit a five-month low. This situation has prompted investors to question whether a recession is on the horizon and has led to a surge in Google searches for “stock market crash,” increasing by 233% in the past week.
While the tech sector faces challenges, the cryptocurrency market has been trending upwards. CoinGecko reports a 16.3% increase in the market cap of cryptocurrencies to reach $1.3 trillion in the past week. Bitcoin, Ether, Binance Coin, and XRP have experienced significant growth of 23.3%, 16.7%, 8%, and 15.2%, respectively, over the last seven days.
However, the crypto market is not immune to 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%, reflecting the impact of broader economic trends.
Experts are divided on whether Bitcoin will decouple further from tech stocks and the S&P 500. Previous research suggests that over the long term, Bitcoin tends to trade like a tech stock due to its extreme volatility. However, it can serve as a hedge against the US dollar, as it has a negative correlation with the currency.
Recent investor movements have led some to speculate that Bitcoin is becoming a safe haven asset. This is especially noticeable as banking stocks have plummeted recently. The decoupling of Bitcoin from the NASDAQ 100, with Bitcoin rising by 34% while the NASDAQ fell by 8.6% since September 1, suggests a flight to safety towards Bitcoin.
As the tech sector experiences a significant decline, investors are turning their attention to the cryptocurrency market. The market’s upward trend amidst the tech recession concerns underscores the growing interest and potential of cryptocurrencies as an alternative investment.