A global sell-off has significantly impacted equity markets and cryptocurrencies, with Bitcoin plummeting over 12% in the last 24 hours. Investors are on edge after a disappointing US jobs report, sparking fears of a potential recession.
Data from Binance.com shows that Bitcoin’s price dropped more than 12% in the last 24 hours. By 01:55 pm on Monday, it was trading at $52,925.47, a 28% decrease from its all-time high of $73,750. Over the past day, Bitcoin’s price has ranged between $49,121.24 and $61,058.94, falling 24% over the past week.
Edul Patel, Co-Founder and CEO of Mudrex, explains that Bitcoin’s decline is due to increased sell-offs and the Bank of Japan’s decision to hike its interest rate. This move strengthened the yen and caused Japan’s Nikkei stock index to fall. At the same time, the US Federal Reserve kept its rates unchanged, and rising tensions between Iran and Israel added further pressure. According to Patel, Bitcoin’s next support level is $53,200, with resistance at $55,800.
The recent downturn started when weak US job figures last week raised concerns about a slowdown in the world’s largest economy. This triggered a record 12.5% drop in Japan’s Nikkei 225 on Monday, while the FTSE 100 and Euronext 100 also declined by 2-3%.
In the crypto market, Bitcoin fell below $50,000 (£39,000) for the first time since February. Meanwhile, Ethereum (ETH) plummeted by over $1,000 within days, dropping from $3,300 at the beginning of the month.
Reasons for the Crypto Market Crash
- Non-farm payroll (NFP) report
Obinna Uzojie, a data analyst at African Policy, noted that the Non-Farm Payroll (NFP) report from the U.S. Bureau of Labor Statistics significantly impacted the crypto market.
He explained, “The NFP report has caused a ripple effect across markets. With tech stocks like NVIDIA, Apple, and Alphabet (Google) experiencing a surge, we’ve also seen layoffs and a persistently low NFP record. This has triggered stock sell-offs, creating a sense of fear that has spilled over into the crypto markets, leading many investors to sell off their holdings.”
- US economy
Olayimika Oyebanji, a Web 3 policy expert, highlighted another macroeconomic factor contributing to the crypto market crash: the Federal Reserve’s decision to tighten the money supply. He also discussed the broader state of the U.S. economy.
He stated, “When the central bank raises interest rates, borrowing becomes more expensive, making risky assets like cryptocurrencies less appealing. This tightening of the money supply could have played a role in the crash.
Additionally, if the economy weakens or there are fears of a recession, investors often become nervous and pull their money from high-risk Crypto investments, which may have further impacted the crypto market.
- Speculative Bubbles
Speculative bubbles form when many investors enter the market driven by hype rather than actual value. In cryptocurrencies, this can lead to rapid price increases, attracting both experienced and inexperienced traders. When sentiment shifts, fear can trigger mass sell-offs, resulting in significant market corrections and financial instability.
- Regulatory Changes: Governments
Regulatory changes occur when governments implement strict laws and guidelines for cryptocurrency trading. These regulations can create uncertainty in the market, as investors may fear potential restrictions or penalties. This uncertainty often leads to decreased investor confidence, prompting many to withdraw their funds, which can significantly impact cryptocurrency prices.