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Poor macroeconomic sentiment and increasing fears of a recession in the West laid the backdrop for cryptocurrencies to lose 4% of their market capitalization in the past 24 hours, with several major tokens taking hits of up to 8%.
Analysts at Goldman Sachs said in a note that the Federal Reserve's aggressive measures to control inflation could result in a recession. The investment bank put the odds of an economic contraction – a phase of the business cycle in which the economy as a whole is in decline – at about 35% over the next two years.
Bitcoin (BTC) dropped to under $38,500 during trading hours in Asia to change hands at its lowest point in over a month. That is despite April being a seasonally bullish month for the largest cryptocurrency when prices have risen seven times in April in the past 10 years, data shows.
Ether (ETH) lost the $3,000 mark, falling 10% in the past week. In the past 24 hours, Solana’s SOL and Cardano’s ADA fell 6.6%, while meme coins Shiba Inu (SHIB) and Dogecoin (DOGE) fell as much as 7%, leading losses among major cryptos.
DOGE prices fell after a sudden rally last week buoyed by positive sentiment as speculators bet on Tesla (TSLA) CEO Elon Musk’s intended takeover of social media giant Twitter (TWTR). Prices crossed $0.15 at the time, but fell to support at the $0.13 mark over the weekend.
Global markets affecting bitcoin recovery
Analysts said the slide in global markets contributed to a fall in bitcoin and crypto prices.
“Bitcoin declined for the second week in a row under negative stock market performance. Last week’s noticeable decline in bitcoin occurred amid a significant drawdown in US stock indices,” Alex Kuptsikevich, an analyst at FxPro, wrote in an email to CoinDesk.
Global markets, however, would have to severely underperform if bitcoin were to fall further, analysts added.
“A consolidation scenario below $30K would require an absolute disaster in the financial markets,” Kuptsikevich said. “We have seen steady and impressive demand from long-term buyers as we have fallen into this area.”
Asian markets and U.S. futures fell on Monday amid concerns of faster policy tightening by the Fed. India’s Sensex ended 2.01% lower, and Singapore’s stock index lost nearly 1%. In the U.S., S&P 500 futures opened 0.26% lower, and the tech-heavy Nasdaq slid 0.37%.
Gold reached five-week highs to just under $2,000. Natural gas prices surged to the highest intraday level in more than 13 years.
Bitcoin previously saw the $30,000 mark last July. It then erased losses over the following months to set a lifetime high of nearly $69,000 in November. Profit-taking and falling macroeconomic sentiment have dented grandiose price targets for bitcoin since then, with prices dropping 43%.
Meanwhile, tokens outside the top 20 cryptocurrencies by market capitalization saw even bigger losses. Chainlink’s LINK tokens dropped 9%, Bitcoin Cash’s BCH fell 10%, and Filecoin’s FIL fell 11%.
Among the handful of outperformers were Chain’s XCN and Stacks’ STX with upward of 6% in gains in the past 24 hours.