Bitcoin and ether plunged on Monday to multi-month lows as worries over a possible U.S. recession in the wake of soft data gripped financial markets and triggered a rush out of risky assets. The selloff marks a stunning reversal just days after optimism fueled by Republican presidential candidate Donald Trump's speech pushed bitcoin, the world's biggest cryptocurrency, over the $70,000 mark for the first time in more than a month. Crypto markets have gotten a boost this year after the U.S. Securities and Exchange Commission approved exchange-traded funds to track the spot prices of bitcoin and ether. More recently, however, the currencies have tumbled alongside other assets including global equities, as investors fear a U.S. recession could be on the horizon, with rising geopolitical worries also weighing.
Bitcoin has lost over a third of its value since hitting a record high in March. The increasing correlation with equities has also undermined its reputation as a safe-haven asset.
"It's a big reminder that bitcoin and crypto in general are risk assets and sit at the pointy end of the risk spectrum," said Tony Sycamore, market analyst at IG.
Bitcoin fell 12% to $52,054, heading for its largest one-day fall since November 2022. Ether slid as much as 21% to its lowest since January.
Sycamore said bitcoin was testing trend channel support at the $54,000/$53,000 area and needed to hold there to "prevent further capitulation towards $48,000."
Shares in crypto-related U.S. stocks also plunged before the open on Monday. Miners CleanSpark, Bitfarms, Riot Platforms and Marathon Digital slumped between 12% and 18%.
Coinbase shares lost 10%, while bitcoin buyer MicroStrategy slipped nearly 15%.
