Bitcoin continued to lose considerable ground and other cryptocurrencies crashed on Monday amid a generally gloomy mood on the financial markets and major drops in stocks from Asia to Europe.
The price of the oldest and best-known cryptocurrency plummeted 12% to $52,054, heading for its largest one-day fall since November 2022. Ether slid as much as 21% to its lowest since January.
Bitcoin has lost around $10,000 in value since Friday. The last time there was a comparably sharp price slump was in June 2022.
The selloff marks a stunning reversal just days after optimism fueled by Republican presidential candidate Donald Trump's speech pushed bitcoin, the world's biggest cryptocurrency, over the $70,000 mark for the first time in more than a month.
Crypto markets have gotten a boost this year after the U.S. Securities and Exchange Commission (SEC) approved exchange-traded funds (ETFs) to track the spot prices of bitcoin and ether.
More recently, however, the currencies have tumbled alongside other assets including global equities, as investors fear a U.S. recession could be on the horizon, with rising geopolitical worries also weighing.
Bitcoin has lost over a third of its value since hitting a record high in March. The increasing correlation with equities has also undermined its reputation as a safe-haven asset.
"It's a big reminder that bitcoin and crypto in general are risk assets and sit at the pointy end of the risk spectrum," said Tony Sycamore, market analyst at IG.
Sycamore said bitcoin was testing trend channel support at the $54,000/$53,000 area and needed to hold there to "prevent further capitulation towards $48,000."
Shares in crypto-related U.S. stocks also plunged before the open on Monday. Miners CleanSpark, Bitfarms, Riot Platforms and Marathon Digital slumped between 12% and 18%.
Coinbase shares lost 10%, while bitcoin buyer MicroStrategy slipped nearly 15%.
The fall continues a trend that began last week. German analyst Timo Emden, from Emden Research, spoke of a "cocktail of uncertainty" that is currently weighing on bitcoin.
"In particular, the newly sparked fears of recession in the U.S. are catching investors on the wrong foot," he said.
There have been several disappointing economic data releases in the U.S. in recent weeks. In particular, an unexpectedly weak labor market report from the U.S. government caused concern.
In July, unemployment in the world's largest economy rose to its highest level for almost three years.
In addition to Bitcoin, other cryptocurrencies also came under heavy selling pressure at the start of the week. This represents a setback for the newly launched ethereum ETFs, which were intended to attract new investors in the U.S.
The recent price losses have significantly reduced the market capitalization of all cryptocurrencies. It fell by around 14% to $1.85 trillion. Bitcoin's share was recently put at around 56%.
The price performance over the past week shows once again just how volatile trading in cryptocurrencies is.