Bitcoin fell sharply after major US stock indexes sold off. Bitcoin has been closely correlated with the price movement of the Nasdaq index.
Luke MacGregor | Bloomberg | Getty Images
Cryptocurrencies fell amid a global market selloff fueled by recession fears.
Its price bitcoin it was last down 7% on Monday at $50,193.00, according to Coin Metrics, and is on pace for its worst day since June 2022. At one point, it fell to $49,111.10, its lowest level since February 13. Just seven days ago, on July 20, it went up to $69,982.
“A 30 percent drop, as scary as it is, is par for the course during bull markets, and it’s encouraging that bitcoin is back above $50,000,” Nexo co-founder Antoni Trenchev said. “But make no mistake, we are in a volatile, volatile market environment… the moment it turns bullish will be when bitcoin retraces its 200-day moving average, which usually tells us whether we are in a bull or bear market, at $61,500. “
Ether fell 9% to $2,481.85, clawing back earlier losses that at one point erased year-to-date profit.
Cryptocurrency stocks were among the hardest hit. Coinbase plunged 19%, while MicroStrategy slipped 26%. Mining stocks also suffered double-digit losses.
The moves follow a broader market sell-off that began last week, when a weaker-than-expected July jobs report renewed investor fears of a recession. The tech-heavy Nasdaq Composite entered a correction. Japanese shares entered a bear market on Monday after plunging more than 12% overnight, the worst one-day sell-off since 1987.
Bitcoin is down more than 15% since Saturday.
“Until last Wednesday, everyone believed that inflation was gradually falling and the economy was relatively strong, so the Fed would start cutting interest rates with a successful soft landing of the economy,” said Yuya Hasegawa, cryptocurrency market analyst at Japanese bitcoin exchange Bitbank . “However, July’s US manufacturing and jobs PMI report was weaker than the market expected — and now [investors] they are worried about the possibility of recession and dumping risk assets.’
“That said … the market reaction was a bit over the top given that there are no absolute signs that the economy is still in recession,” he continued. “We’ll probably see some rebound this week.”
In addition to economic and geopolitical concerns, cryptocurrency investors faced selling pressure from the distributions of Mt. Gox and the declining odds of a second Donald Trump presidency in U.S. polls at Polymarket, an Ethereum-based prediction market platform, show the gap between Trump and Vice President Kamala Harris has narrowed significantly since President Joe Biden stepped down from the July 21 race.
Bitcoin is already down about 23% for the month of August, a typically subdued month for risk assets and below the $55,000 floor that supported it for much of the year. If it doesn’t recover, it could be its worst month since June 2022, when it lost about 37%.
Bitcoin still holds an 18% year-to-date gain, but the current turmoil in cryptocurrency prices has investors questioning the validity of the currency’s narrative as a hedge against uncertainty.
“Bitcoin as a hedge narrative is misleading,” Hasegawa said. “It acts as a hedge against fiat currency, but it’s still a risk asset. In the long run, I think it’s better to hold bitcoin than any fiat currency, but investors tend to sell high-volatility assets first when risk arises.”
— CNBC’s Gina Francola contributed reporting.
