Bitcoin, ether hit multi-month lows as recession worries take hold

Bitcoin and ether plunged on Monday (Aug 5) to multi-month lows as worries over a possible US recession in the wake of soft data gripped financial markets and triggered a rush to safe-haven assets.

Crypto markets have gotten a boost this year after the US Securities and Exchange Commission approved an exchange-traded fund to track the spot price of bitcoin and ether.

More recently, however, bitcoin has fallen alongside other assets including global equities in a broad selloff as investors fear a US recession could be on the horizon, with rising geopolitical worries also weighing. It has lost over a third of its value since hitting a record high in March.

"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.

Bitcoin fell 13 per cent from its close on Sunday to US$51,560, heading for its largest one-day fall since November 2022 and its lowest since February. Ether slid 17 per cent to its lowest since mid-January at US$2,277.

Sycamore said bitcoin was testing trend channel support at the US$54,000/US$53,000 area and needed to hold there to "prevent further capitulation towards US$48,000."

Shares in crypto-related US stocks listed in Frankfurt fell heavily in early trading on Monday, with Coinbase down over 18 per cent, while those in miners Riot Platforms and Marathon Digital were down 17.7 per cent and 20 per cent, respectively.