Bitcoin experienced a significant drop on Monday, plunging more than 14% to hover around $52,000, as fears of a potential U.S. recession triggered a flight to safer assets. This sharp decline in the cryptocurrency market highlights the growing unease among investors following weaker-than-expected jobs data from the U.S., which cast doubt on the strength of the economic recovery.
Cryptocurrency Market Takes a Hit
The price of Bitcoin fell to as low as $52,029 at 06:14 GMT on Monday, marking a daily loss of 14.40%. Ethereum, the world’s largest altcoin by market capitalization, also suffered a steep decline, plunging by 21.61% to $2,283. The broader cryptocurrency market reflected these losses, with its overall value dipping more than 15% for the day to approximately $1.83 trillion, according to data from CoinMarketCap.
This downturn was largely driven by the release of U.S. employment figures, which showed that the economy added only 114,000 jobs in July, falling short of market expectations of 176,000. The disappointing data fueled concerns that the Federal Reserve may have acted too late in adjusting its monetary policy, potentially pushing the U.S. economy toward a recession.
Market Sentiment Shifts
The decline in Bitcoin on Monday was not an isolated event. The cryptocurrency had already seen its price drop below $63,000 on Thursday, breaking a 17-day streak above that threshold. During the day, Bitcoin reached a low of $62,313 before slightly recovering to trade around $62,842 by 14:58 EDT, representing a daily loss of 5.5%. Similarly, Ethereum fell to $3,088, a decrease of 6.8%.
The cryptocurrency market had enjoyed a boost earlier in the year, buoyed by the U.S. Securities and Exchange Commission’s approval of exchange-traded funds (ETFs) that track the spot prices of Bitcoin and Ethereum. However, the recent selloff marks a dramatic reversal, underscoring the volatility that continues to characterize the digital asset market.
Investor Caution and Economic Uncertainty
The recent selloff in cryptocurrencies highlights the increasing correlation between digital assets and traditional equities, undermining Bitcoin’s reputation as a safe-haven asset. As global economic concerns mount, particularly fears of a U.S. recession, investors have begun to reassess their risk exposure, leading to a broad selloff in both cryptocurrencies and global equities.
“It’s a big reminder that Bitcoin and crypto in general are risk assets and sit at the pointy end of the risk spectrum,” commented Tony Sycamore, market analyst at IG. Sycamore noted that Bitcoin was testing critical support levels around $54,000 to $53,000, warning that a failure to hold these levels could lead to further declines toward $48,000.
The impact of the selloff was also felt across crypto-related stocks in the U.S., with shares of companies such as CleanSpark, Bitfarms, Riot Platforms, and Marathon Digital falling between 12% and 18% before the market opened on Monday. Coinbase shares dropped 10%, while MicroStrategy, a major Bitcoin buyer, saw its stock price slip nearly 15%.
Political Influence on Cryptocurrency
Adding to the market’s volatility, political developments have also played a role in shaping investor sentiment. Over the weekend, U.S. presidential candidate Robert F. Kennedy Jr. announced his intention to issue several Bitcoin-related executive orders if elected. Speaking at a Bitcoin Conference in Tennessee, Kennedy promised to direct the U.S. Department of Justice and U.S. Marshals to transfer approximately 200,000 Bitcoin held by the government to the U.S. Treasury as a strategic asset. He also proposed that the Treasury Department purchase 550 Bitcoin daily until the U.S. holds a reserve of 4 million Bitcoin.
“Our nation approximately holds 19% of global gold reserves. This policy will give us about the same proportion of total Bitcoin,” Kennedy stated, predicting that these actions would eventually drive Bitcoin to a valuation of “hundreds of trillions of dollars.”
As the cryptocurrency market continues to navigate these turbulent waters, the intersection of economic uncertainty and political influence will likely remain key factors shaping its future trajectory.
