While there is a growing confidence that the Federal Reserve will soon lower interest rates, leading to a surge in stocks and bonds, cryptocurrencies are not participating in the rally.
On Thursday, digital assets and related equities continued to decline, with some of the most significant drops affecting tokens and companies linked to ventures associated with Donald Trump’s family. These ventures had gained traction due to his pro-crypto policies.
Shares of ALT5 Sigma Corp., which holds the WLFI token for the Trump-associated decentralized finance project World Liberty Financial Inc., fell by approximately 12%. In the last week, the stock has dropped over 50%. The WLFI token declined by roughly 25% and has decreased approximately 50% since its launch on Labor Day. The American Bitcoin Corp., the mining company Eric Trump is associated with that began trading on Wednesday, saw a decline of up to 22%.
World Liberty organized a live event on CoinMarketCap’s website to help alleviate concern, which was attended by over 2,000 people on Thursday. A representative informed, “The World Liberty Financial team is dedicated to developing and delivering top-tier products like USD1 that can make DeFi accessible to millions around the world.”
Also affecting sentiment is worry about a potential backlash against the surge of publicly digital-asset treasury companies that have emerged in recent months and are investing in various tokens. After numerous companies that were previously struggling transitioned to crypto, the shares of many of the so-called DATs surged.
The Information reported on Thursday that Nasdaq, where most of these companies are listed, is mandating that some of the token-holding firms obtain shareholder approval before issuing shares for token purchases. Treasury companies have increasingly turned to share offerings as a means of raising additional funds for coin purchases, a model initiated by Michael Saylor of Strategy. This strategy has been employed by the treasury firms for buying coins while avoiding additional debt.
According to Architect Partners, a financial advisory firm, 184 publicly traded companies have announced their intention to raise over $132 billion to purchase various coins.
“The NASDAQ decision is certainly perfectly consistent with the rights afforded to shareholders,” stated Eric Risley, who is the founder and managing partner of Architect Partners. “It should be expected and demanded that there is full disclosure and a chance to have a say, even if this is not already arranged. Yes, it probably slows the transaction velocity, but that may be beneficial.
Many other treasury companies’ shares, including those holding Ether, also declined, with Sharplink Gaming dropping 9.7%, for instance. Ether dropped by 3.3%. The treasury firm DeFi Technologies, which holds Solana, saw a decline of 4.6%, while Solana itself dropped by 3.8%.
Investor Morten Christensen told WLFI that as the value of treasury companies’ shares declines, the prices of the underlying coins are also decreasing, as investors are reassessing the worth of the underlying tokens on these companies’ balance sheets.
Christensen, who operates AirdropAlert.com, stated, “I believe we will observe numerous arbitrage activities involving ALT stock compared to WLFI until the value ratio becomes favorable.” “I suspect it’s traders calculating the ALT/WLFI price ratio, along with shorters profiting from it.”
For WLFI, the circulating supply of the token turned out to be greater than some traders had anticipated, leading to their discouragement. According to Andrew Tu, who heads business development at the crypto market maker Efficient Frontier, some individuals opted to cash in on profits after purchasing the token for prices ranging from 1.5 to 5 cents.
The latest data on hiring and unemployment claims, released Thursday, have bolstered the perception of a cooling labor market, as employers displayed minimal enthusiasm for taking on workers in August. Fed policymakers have kept rates steady this year after reducing them by a full percentage point last fall, due to concerns that tariffs could rekindle price pressures.
Shiliang Tang, managing partner of Monarq Asset Management, stated, “From a macro perspective, people are reducing their risk a bit in anticipation of tomorrow’s employment data, which is significant economic information before the Fed meeting later this month.”
Bitcoin, the market bellwether, decreased by roughly 2% to approximately $109,800, landing it toward the lower end of the recent trading range for the original cryptocurrency. Just prior to election day last year, its trading value was approximately $69,000. On August 14, Bitcoin achieved a historic high of just past $125,000.
