The cryptocurrency market experienced significant declines recently, with major assets like Bitcoin and Ether plummeting to multi-month lows. This downturn is part of a broader selloff across financial markets driven by growing concerns over a potential US recession and geopolitical uncertainties.
On Sunday, the overall value of cryptocurrencies dropped by approximately $270 billion, led by a steep 11% fall in Bitcoin and a 21% plunge in Ether. The decline in crypto assets coincided with a sharp drop in equities across the Asia-Pacific region, where Japan’s Nikkei 225 fell by as much as 7%. This slide followed the Bank of Japan’s decision to raise its benchmark interest rate to its highest level in 16 years, exacerbating the selloff.
In the US, the Nasdaq saw a 3.4% decline last week, marking its worst three-week performance since September 2022. Major tech stocks, including Amazon and Nvidia, contributed to these losses. The fall in equities was partially attributed to disappointing earnings reports, a weaker-than-expected jobs report, rising unemployment, and a declining manufacturing sector. The US Federal Reserve’s decision to hold its benchmark rate steady, without indicating a potential rate cut in the near future, further dampened market sentiment.
Bitcoin’s price reached its lowest level since February, trading around $54,000, though it remains up nearly 23% for the year. Ether fell to approximately $2,300, erasing its gains for the year. Other cryptocurrencies also suffered, with Binance’s BNB token dropping more than 15% and Solana declining by 10%.
On Monday, the market downturn continued as Bitcoin and Ether hit new multi-month lows. Bitcoin fell 13% from its Sunday close to $51,560, marking its largest one-day drop since November 2022 and its lowest price since February. Ether slid 17% to $2,277, its lowest since mid-January. Shares of US crypto-related stocks listed in Frankfurt also fell sharply, with Coinbase down over 18% and crypto miners Riot Platforms and Marathon Digital dropping 17.7% and 20%, respectively.
The recent selloff highlights the volatility of cryptocurrencies as high-risk assets. Despite a boost earlier this year from the approval of exchange-traded funds tracking the spot price of Bitcoin and Ether, these digital currencies have not been immune to the broader market fears of a looming recession in the US and rising geopolitical tensions. As investors flock to safer assets, the cryptocurrency market continues to face significant pressure.
