Poor macroeconomic sentiment, with growing concerns about a possible recession in the West, created the conditions for cryptocurrencies to lose 4% of their market value in the last 24 hours, with many prominent tokens suffering losses of up to 8%.
Researchers at Goldman Sachs stated that aggressive measures taken by the Federal Reserve to control inflation would trigger a recession. The investment bank put the odds of an economic contraction – a business cycle’s period in which the economy declines – at roughly 35% during the next two years.
Bitcoin (BTC) fell to under $38,500 during Asian trading hours, marking its lowest position in more than a month. However, April has historically been a seasonally optimistic month for the world’s largest crypto, with prices rising seven times in April over the previous ten years.
Ether (ETH) has fallen below the $3,000 level, with a 10% drop last week. SOL and ADA plummeted 6.6% over the previous 24 hours, while meme currencies Shiba Inu (SHIB) and Dogecoin (DOGE) plunged as high as 7%.
DOGE prices slumped after a sharp surge last week, fueled by positive sentiment as speculators gambled on Tesla CEO Elon Musk’s planned acquisition of Twitter (TWTR). Prices reached $0.15 at the time but dropped to a support level of $0.13 during the weekend.
Dogecoin slumped to support after a temporary surge last week. Source: TradingView
Global markets’ impact on bitcoin’s recovery
Analysts believe that the decline in global markets had its part in the decline in bitcoin and crypto prices.
Alex Kuptsikevich, an analyst at FxPro, said that bitcoin prices fell for the second week in a row as the stock market suffered a setback. Bitcoin had a large decrease last week, coinciding with a substantial decline in US stock indexes.
According to analysts, if bitcoin were to fall still more, global markets would have to suffer a significant underperformance.
As stated by Kuptsikevich, a consolidation situation below $30K would require a complete and utter meltdown in the financial markets. When we have fallen into this area, we have experienced a consistent and exceptional demand from long-term customers.
On Monday, Asian markets and U.S. futures tumbled on fears that the Federal Reserve may tighten policy sooner rather than later. The Sensex in India was 2.01 lower, while the S&P 500 futures opened 0.26% lower, and the tech-heavy Nasdaq slid 0.37%
Gold touched five-week highs, trading slightly below $2,000. Natural gas prices soared to their highest intraday level in more than 13 years.
Bitcoin had already reached the $30,000 milestone in July of last year. In the following months, it recovered all of its losses and reached a new all-time high of over $69,000 in November. Profit-taking and a deteriorating macroeconomic environment have weighed on bitcoin’s lofty price projections since then, with the cryptocurrency’s value plunging by 43%.
Bitcoin dropped below pivotal support at $40,000. Source: TradingView
Meanwhile, tokens not among the top 20 most valuable cryptocurrencies in terms of market capitalisation suffered even greater losses. The price of Chainlink’s LINK tokens decreased by 9%, Bitcoin Cash’s BCH tokens fell by 10%, and Filecoin’s FIL tokens dropped by 11%.
Chain’s XCN and Stacks’ STX were among the few outperformers, both witnessing increases of more than 6% in the last 24 hours.