Bitcoin and ether experienced sharp declines on Monday, reaching multi-month lows as financial markets grappled with fears of a potential U.S. recession following disappointing economic data. This downturn prompted a surge in demand for safe-haven assets.
Earlier this year, the cryptocurrency markets enjoyed a boost when the U.S. Securities and Exchange Commission approved an exchange-traded fund (ETF) to track the spot prices of bitcoin and ether. However, recent trends have reversed this momentum. Bitcoin, which had reached a record high in March, has since fallen by more than 33% amid a broad market selloff, exacerbated by rising geopolitical tensions.
Tony Sycamore, a market analyst at IG, noted, “This situation serves as a stark reminder that bitcoin and cryptocurrencies are high-risk assets, positioned at the extreme end of the risk spectrum.”
On Monday, bitcoin plummeted 13% from its previous close to $51,560, marking its steepest single-day drop since November 2022 and its lowest level since February. Ether fell 17% to $2,277, its lowest point since mid-January.
Sycamore highlighted that bitcoin is currently testing crucial support levels around $54,000/$53,000. “It is essential for bitcoin to maintain these levels to avoid further declines towards $48,000,” he added.
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