Bitcoin and ether dropped to multi-month lows on Monday as concerns about a potential U.S. recession, fueled by weak economic data, led investors to flee risky assets. This selloff comes as a stark contrast to the recent optimism that saw bitcoin surpass the $70,000 mark for the first time in over a month, following a speech by Republican presidential candidate Donald Trump.
Earlier this year, the crypto markets received a boost when the U.S. Securities and Exchange Commission approved exchange-traded funds (ETFs) to track the spot prices of bitcoin and ether. However, more recently, both cryptocurrencies have fallen alongside other assets, including global equities, as fears of a looming U.S. recession and rising geopolitical tensions have weighed on investor sentiment.
Bitcoin has lost over a third of its value since reaching a record high in March, with its increasing correlation with equities challenging its status as a safe-haven asset.
“This is a stark reminder that bitcoin and crypto, in general, are risk assets and sit at the pointy end of the risk spectrum,” said Tony Sycamore, a market analyst at IG.
Bitcoin fell 12% to $52,054, heading for its largest one-day drop since November 2022, while ether plunged as much as 21%, reaching its lowest point since January. Sycamore noted that Bitcoin was testing trend channel support in the $54,000/$53,000 range and needed to maintain this level to “prevent further capitulation towards $48,000.”
Shares in U.S. crypto-related stocks also declined sharply before the market opened on Monday. Mining companies such as CleanSpark, Bitfarms, Riot Platforms, and Marathon Digital fell between 12% and 18%. Coinbase shares dropped 10%, while bitcoin purchaser MicroStrategy slipped nearly 15%.
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