The US stock market experienced a significant downturn yesterday as investors reacted to the latest economic data, which raised concerns about a potential recession. All major US indices declined, with the technology sector bearing the brunt of the selloff.

Nvidia, a leading chipmaker, saw its share price plummet by 9.5%, wiping billions off its market capitalization. The Philadelphia Semiconductor Index also suffered its worst decline since the pandemic began.

Multiple factors contributed to the sharp decline.

The US ISM Manufacturing Index for August came in at 47.2, below the expected 47.5, and has been below the 50-mark for five consecutive months, indicating a continued slowdown in manufacturing activity. Additionally, the earlier released Markit Manufacturing PMI data of 47.9, also below expectations and the previous value of 48, further fueled market concerns about the US economic outlook.

The primary reason for the tech sector's sharp decline was twofold. First, analysts reiterated warnings that AI stocks were overvalued and unlikely to generate meaningful profits in the short term. Second, the US Department of Justice issued a formal subpoena to Nvidia, investigating whether the tech giant had violated antitrust laws.

According to reports, the US Department of Justice's antitrust investigation primarily focuses on whether Nvidia has pressured cloud service providers to purchase multiple products in the GPU market. The investigation also looks into whether Nvidia has levied higher prices on customers purchasing chips from competitors. Nvidia has vehemently denied these allegations, emphasizing the company's adherence to competition regulations. However, with France conducting a similar investigation, Nvidia may face more legal challenges in the future.

Bitcoin Crashes Below $56,000

Influenced by the decline in US stocks, Bitcoin experienced a sustained drop from $59,000 last night, accelerating downward to reach a low of $55,600 at the time of writing. This marks the lowest level since August 8th, representing a decline of over 5% in the past 24 hours.

Ethereum Nears $2,300

Following a similar trend to Bitcoin, Ethereum's price dipped to $2,303 at the time of writing, representing a decrease of approximately 7% in the past 24 hours.

$196 Million in Liquidations Across Exchanges

Amidst Bitcoin's volatile decline, data from Coinglass shows that approximately $196 million worth of cryptocurrency contracts were liquidated across exchanges in the past 24 hours, with over 73,000 traders facing liquidations.

The market is currently focused on the US non-farm payroll data to be released this Friday, as it will provide insights into the US economic outlook and the potential path of the Federal Reserve's interest rate cuts. The Bitop market analysis team will continue to provide you with the latest updates.

Disclaimer: None of the information contained here constitutes an offer (or solicitation of an offer) to buy or sell any currency, product or financial instrument, to make any investment, or to participate in any particular trading strategy.