Bitcoin traded below pivotal support of $40,000 in European hours on Monday, reaching its lowest prices in nearly a month.
Poor macroeconomic sentiment and increasing fears of recession in the West laid the backdrop for cryptocurrencies to lose some 4% of their market capitalization in the past 24 hours, with several major tokens taking hits of upto 8%.
Analysts at Goldman Sachs said in a note that the Fed’s aggressive measures to control inflation could likely result in recession. The 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 under $38,500 in Asian hours to trade at its lowest point in over a month. This is despite April being a seasonally bullish month for the largest cryptocurrency when prices have risen seven times in the same month out of the past 10 years, data show.
Ether (ETH) lost the $3,000 mark, falling some 10% in the past week. In the past 24 hours, Solana’s SOL and Cardano’s ADA fell 6.6%, while memecoins 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 Elon Musk’s intended takeover of social media giant Twitter. 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,” explained Alex Kuptsikevich, the senior financial analyst at FxPro, in an email to CoinDesk.
However, global markets would have to severely underperform if bitcoin is 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 Federal Reserve (Fed). India’s Sensex ended 2.01% lower, while Singapore’s stock index lost nearly a percent. In the U.S., S&P 500 futures opened 0.26% lower and 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 in July last year, erasing losses over the following months to set lifetime highs of nearly $69,000 in November. Profit-taking and falling macro-economic sentiment have dented grandiose price targets for bitcoin, with prices slipping 43% since then instead.
Meanwhile, tokens outside the top twenty 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 out-performers were Chain’s XCN and Stacks’ STX with upward of 6% in gains in the past 24 hours.
This article was originally published on coindesk.com