Aug 5 2024: Bitcoin and ether tumbled on Monday to their lowest levels in months as concerns over a potential U.S. recession, following weak economic data, shook financial markets and prompted a sell-off in risky assets.
This sell-off marked a dramatic turnaround just days after optimism, sparked by Republican presidential candidate Donald Trump’s speech, had propelled bitcoin—the world’s largest cryptocurrency—above the $70,000 mark for the first time in over a month.
Earlier this year, the crypto markets received a boost when the U.S. Securities and Exchange Commission approved exchange-traded funds to track the spot prices of bitcoin and ether.
Recently, however, these currencies have fallen alongside other assets, including global equities, as investors fear an impending U.S. recession, compounded by rising geopolitical tensions.
Since hitting a record high in March, bitcoin has lost over a third of its value. Its growing correlation with equities has also diminished its status as a safe-haven asset.
“This is a stark reminder that bitcoin and cryptocurrencies, in general, are risk assets and occupy the high-risk end of the investment spectrum,” said Tony Sycamore, market analyst at IG.
Bitcoin dropped 12% to $52,054, heading towards its largest one-day fall since November 2022. Ether plummeted by as much as 21%, reaching its lowest point since January.
Sycamore noted that bitcoin was testing trend channel support at the $54,000/$53,000 range and needed to hold at this level to “prevent further decline towards $48,000.”
Shares in U.S. crypto-related stocks also plummeted before the market opened on Monday. Miners such as CleanSpark (NASDAQ
), Bitfarms, Riot Platforms (NASDAQ
), and Marathon Digital (NASDAQ
) fell between 12% and 18%. Coinbase (NASDAQ
) shares dropped 10%, while bitcoin buyer MicroStrategy slipped nearly 15%.