- Bitcoin fell on Monday as the global market collapsed.
- Cryptocurrencies have not been spared the ravages as traders face a growing risk of a recession in the United States.
- Ether also fell sharply, dropping 12% shortly after 12:00 p.m. ET.
Bitcoin fell on Monday amid a broad wave of selling in financial markets that began last week.
The world’s largest cryptocurrency fell 19% over the weekend, but pared that loss to about 7% shortly after noon Monday. The token was trading at $54,934 as of 12:24 p.m. ET.
Ethereum, the world’s second-largest cryptocurrency, was also down, trading 12% lower at $2,488.
The selloff in cryptocurrencies comes as risk assets plunge into a global market rout driven by concerns about the state of the U.S. economy.
A disappointing jobs report and weak manufacturing data last week raised concerns that the Federal Reserve waited too long to cut rates.
Some market watchers believe the historic rout could prompt the central bank to cut emergency interest rates next week. Such a move would be a rare acknowledgement by the Fed of the dire conditions facing the economy. Historically, emergency rate cuts have been reserved for “black swan” events like the pandemic and the Sept. 11 terrorist attacks.
The wave of stock market volatility is the sharpest since the start of the COVID-19 pandemic in 2020. Japan’s Nikkei 225 index fell 12% early Monday, its worst single-day drop since 1987, and markets in South Korea and Europe also plunged.
With weaker-than-expected job growth, “financial markets are indicating that risk is no longer balanced between growth and inflation,” Bank of America analysts said in a note Sunday.
Analysts are not optimistic that new data in the coming weeks could influence markets.
“Recent data suggest that growth is slowing faster than expected and there will be no major data or earnings releases in the coming weeks that could reverse the narrative,” they said.
The upcoming release of consumer price index data on August 14 could “be a major catalyst for declines if it comes soon,” they added.
Some cryptocurrency experts remain optimistic and believe the selloff is just a step before further gains materialize.
“Judging by the historical trends of the cryptocurrency market, before the market forms a real bullish momentum, it needs to experience a sharp decline to reduce long positions in the contract to reduce selling pressure for future upside,” Gracy Chen, CEO of cryptocurrency exchange Bitget, said in a note on Monday.
