Bitcoin fell sharply after the major US stock indices fell. Bitcoin is closely linked to the price movement of the Nasdaq index.
Luke MacGregor | Bloomberg | Getty Images
Cryptocurrencies have fallen amid a global market sell-off fueled by recession fears.
The price of Bitcoin Bitcoin’s price fell 8% last Monday to $53,996.70, according to Coin Metrics. At one point, it fell to $49,111.10, its lowest level since February 13. Seven days earlier, on July 20, it had climbed to $69,982.
“30% drops, as scary as they are, are commonplace during bull markets and it is encouraging to see bitcoin rebound above $50,000,” said Nexo co-founder Antoni Trenchev. “But make no mistake, we are in a choppy and volatile market environment… the time to turn bullish will be when bitcoin reclaims its 200-day moving average, which typically tells us whether we are in a bull or bear market, at $61,500.”
Ether fell 11.44% to $2,432.22, recovering earlier losses that at one point erased its year-to-date gain.
Crypto stocks fell along with bitcoin. Coinbase recorded a 7% decrease, while MicroStrategies fell 9%, cutting earlier losses by more than half.
The moves follow a broader market selloff that began last week, when a weaker-than-expected July jobs report rekindled investor fears of a recession. The tech-heavy Nasdaq Composite entered a correction. Japanese stocks entered a bear market Monday after plunging more than 12% overnight, their worst one-day decline since 1987.
Bitcoin has fallen more than 15% since Saturday.
“Until last Wednesday, everyone thought that inflation was gradually coming down and the economy was relatively strong, so the Fed would start cutting rates if the economy managed to have a soft landing,” said Yuya Hasegawa, a cryptocurrency market analyst at Japanese bitcoin exchange Bitbank. “However, the July U.S. manufacturing and employment PMI report came in much weaker than the market expected – and now (investors) are worried about the possibility of a recession and are dumping risk assets.”
“That said, the market reaction has been a bit excessive, given that there is no absolute proof yet that the economy is in recession,” he continued. “We will probably see some pullback this week.”
In addition to economic and geopolitical concerns, crypto investors have had to contend with selling pressure from Mt. Gox distributions and the diminishing chances of a second Donald Trump presidency in the United States. Polls on Polymarket, an Ethereum-based market prediction platform, show that the gap between Trump and Vice President Kamala Harris has narrowed significantly since President Joe Biden dropped out of the race on July 21.
Bitcoin has already fallen about 17.5% for August, a typically bleak month for risk assets, and is below the $55,000 floor that has supported it for much of the year. If it fails to recover, it could be its worst month since June 2022, when it lost about 37%.
Bitcoin is still holding on to a 27% year-to-date gain, but the current cryptocurrency price turmoil has investors questioning the validity of the coin’s narrative as a hedge against uncertainty.
“The talk of bitcoin as a safe haven is misleading,” Hasegawa said. “It works as a hedge against fiat currency, but it remains a risk asset. In the long term, I think it’s better to hold bitcoin than any fiat currency, but investors tend to sell high-volatility assets first when risk emerges.”
—CNBC’s Gina Francolla contributed reporting.
