For the first time since February, Bitcoin’s value momentarily dropped below the $50,000 mark.
Editor Thenews24.net
2 min read
Bitcoin experienced a significant drop following a major sell-off in U.S. stock markets, closely mirroring the Nasdaq index’s movements. According to Coin Metrics, Bitcoin’s price fell by 8% on Monday, reaching $53,996.70, and at one point, it plummeted to $49,111.10, its lowest since February 13. This decline came just a week after it had surged to $69,982 on July 20.
Antoni Trenchev, co-founder of Nexo, noted that while 30% declines are typical in bull markets, Bitcoin’s rebound above $50,000 is a positive sign. However, he emphasized the current market’s volatility and suggested that a bullish trend would be confirmed if Bitcoin surpasses its 200-day moving average of $61,500.
Ether also saw a significant drop of 11.44% to $2,432.22, though it managed to recover some of its earlier losses. Crypto-related stocks followed suit, with Coinbase and MicroStrategy falling by 7% and 9%, respectively.
This downturn in the crypto market coincided with a broader market sell-off triggered by recession fears, following a weaker-than-expected July jobs report. The Nasdaq Composite entered a correction, and Japanese stocks fell into a bear market with a dramatic 12% drop, the worst since 1987.
Yuya Hasegawa, a crypto market analyst at Bitbank, explained that until recently, investors believed inflation was decreasing and the economy was strong, anticipating rate cuts from the Federal Reserve. However, disappointing U.S. manufacturing PMI and jobs reports have sparked recession concerns, leading to a sell-off in risk assets. Hasegawa suggested that the market’s reaction might be overblown, as there is no definitive evidence of a recession yet, and a rebound could occur soon.
In addition to economic worries, crypto investors are dealing with sell pressure from Mt. Gox distributions and the narrowing gap between Donald Trump and Kamala Harris in the U.S. presidential race, as indicated by Polymarket polls.
Bitcoin has dropped about 17.5% in August, a typically slow month for risk assets, and is below the $55,000 support level it maintained for much of the year. If it doesn’t recover, this could be its worst month since June 2022, when it lost 37%. Despite the current turmoil, Bitcoin still holds a year-to-date gain of 27%, though its role as a hedge against uncertainty is being questioned.
Hasegawa argued that Bitcoin’s narrative as a hedge is misleading, as it functions as a hedge against fiat currency but remains a high-risk asset. He believes that in the long run, Bitcoin is preferable to fiat currencies, but investors tend to sell volatile assets first when risks arise.
— CNBC’s Gina Francolla contributed to this report.
For more insights on cryptocurrency, check out CNBC PRO: Kamala Harris’s entry into the U.S. presidential race and its potential impact on crypto, the launch of Ether ETFs compared to Bitcoin funds, and the return of investor demand for Bitcoin despite stagnant prices.