Bitcoin and Ether Plunge as Investors Seek Safety

Bitcoin and ether took a significant hit on Monday, dropping to their lowest prices in months. This decline comes as worries about a potential recession in the U.S. intensify, prompting many investors to rush towards safer assets.

Earlier this year, the crypto market enjoyed a boost after the U.S. Securities and Exchange Commission approved an exchange-traded fund to track the spot prices of bitcoin and ether. However, the recent trend shows a different story, with both cryptocurrencies falling alongside global equities as fear of an impending recession looms.

As a result, bitcoin dropped to $53,091, the lowest it has been since late February, while it slightly recovered to $54,112. Ether, on the other hand, slid down to its weakest point since mid-January, with its price dropping 16% to around $2,300. Market analyst, Tony Sycamore from IG, emphasized that bitcoin is currently testing crucial support levels and if it doesn’t hold above the $54,000-$53,000 range, it might face a further decline towards $48,000.

The cryptocurrency market saw approximately $270 billion wiped off its value recently, with bitcoin down by 11% just in the past 24 hours and ether plummeting by a staggering 21%. This sell-off aligns with significant drops in the stock markets, including Japan’s Nikkei 225, which fell as much as 7% after the Bank of Japan raised interest rates to their highest level in 16 years.

In the U.S., the Nasdaq suffered a 3.4% decline last week, marking the tech-heavy index’s worst performance over three weeks since September 2022 when the market was experiencing severe turbulence. The downturn has been linked to disappointing earnings reports and economic indicators, including a weaker job growth rate and a struggling manufacturing sector.

Despite these challenges, bitcoin still holds a year-to-date gain of nearly 23%, with current trading levels around $54,000. Conversely, ether has lost all its yearly gains, trading at approximately $2,300. Additionally, Binance’s BNB token suffered more than a 15% drop, while other leading cryptocurrencies remained about 10% lower.

Market participants are particularly cautious this week as they await new trade data from China and Taiwan, as well as central bank decisions from India and Australia. The recent downturn in the crypto market affects a wider array of investors, especially after the SEC approved new spot exchange-traded funds for bitcoin and ether earlier this year, attracting massive investments into the crypto space.

Interestingly, on Friday, there were reports that Morgan Stanley is set to pitch bitcoin ETFs to its clients, marking a first for Wall Street.