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Will the current weakness in tech stocks effect crypto markets?

Recently there has been been bearish signals in the tech sector, particularly the FANG stocks. Even Tesla recently has seen some negative price action as a result of several news stories. The question is, will these tech sector woes add to the negative pressure on crypto, because after all, crypto is a speculative technology and really is part of the larger tech sector.

We all know Facebook has had a bad few weeks. Its stock is down $80 billion and users and advertisers are asking serious questions about what they plan on doing moving forward. The problem is, any move Facebook makes to address the problems will hurt their main revenue source, and that’s mining user data to serve up invasive ads. So they are stuck between a rock and a hard place, and investors can see that.

Next, we have Tesla. A previous Wall Street darling that is starting to show issues. First a fiery crash possibly caused by their autopilot, but also a recent recall of every Model S model. It looks like high technology is showing some growing pains. Not only that, Tesla is burning money at a shocking rate and not even making money. Tesla sold 100,000 cars at a $2 billion loss, yet their market cap is worth almost double that of Ford which earned a $7.6 billion profit last year. How long can Tesla keep this up?

Next we have Apple, possibly the leading tech stock, and it has shown weakness. Orders are down and the Iphone X was a failure by most accounts. It was too pricey and consumers didn’t think it had the features to justify a price tag that high. However, Apple has enough cash reserves to buy back stock at a rate high enough to keep the price pretty stable.

But overall we are seeing some cracks in the tech sector stocks, and those are the stocks that have accounted for most of the gains in the market recently. And overall the sentiment is that these technology companies are running into issues directly related to their core technologies and whether they can deliver or if the technology itself they have promised is not as good as advertised.

Crypto, is basically a separate but similar sector. It is technology based, and it is far more speculative that the tech sector in traditional markets. So this makes it more vulnerable to bad news.

If the tech sector is cooling in the traditional markets, that probably means that those cool winds will work their way over to the crypto markets and add to the negative forces. If tech companies with proven track records are having issues keeping up with their promises, how does that make crypto look where most projects have zero working products?

So overall, this is something to watch. If the tech sector continues to cool off or show weakness, it could further depress the crypto markets.

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