Cryptocurrencies tumbled amid a global market sell-off spurred by recession fears.
The price of bitcoin sank more than 11% on Monday to $52,501.62, according to Coin Metrics. At one point, it fell to $49,111.10 — its lowest level and first time under the $50,000 since February. It’s lost nearly 16% since Saturday.
Ether losses were even steeper. The crypto asset dropped 15% to $2,321.95, bringing its three-day loss to 23%.
The moves follow a broader market sell-off that began last week, when a weaker-than-anticipated July jobs report renewed investor fears of a recession. The tech-heavy Nasdaq Composite entered a correction. Japan stocks entered a bear market Monday after plunging more than 12% overnight — its worst one-day sell-off since 1987.
Over the weekend, Goldman Sachs raised its recession odds to 25%.
“Until last Wednesday, everybody was thinking that inflation was going down gradually and the economy was relatively strong, so the Fed would start cutting rates with successful soft landing of the economy,” Yuya Hasegawa, crypto market analyst at Japanese bitcoin exchange Bitbank. “However, July’s U.S. manufacturing PMI and jobs report came in way weaker than the market expected – and now [investors] are worrying about the possibility of recession and dumping risk assets.”
“That said … the market’s reaction has been a tad excessive, given there is no absolute evidence that the economy is in recession yet,” he continued. “We will likely see some recoil this week.”
On top of economic and geopolitical concerns, crypto investors have been contending with sell pressure from Mt. Gox distributions and decreasing odds of a second Donald Trump presidency in the U.S. Polls on Polymarket, an Ethereum-based prediction market platform, show the gap between Trump and Kamala Harris has narrowed significantly since President Joe Biden dropped out of the race on July 21.
Bitcoin is already down about 20% for the month of August, a typically quiet month for risk assets, and 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 onto a year-to-date gain of 23%.
“Thirty percent slumps, as scary as they are, are par for the course during bull markets and it’s encouraging bitcoin bounced back above $50,000,” said Nexo co-founder Antoni Trenchev. “But make no mistake, we are in a choppy, volatile market environment … the moment to turn bullish will be when bitcoin retakes its 200-day moving average, which typically tells us if we are in a bull or bear market, at $61,500.”