Cryptocurrencies Nosedive as Global Markets Face Increased Risk Aversion

By Suvashree Ghosh and Ryan Weeks Cryptocurrencies reeled from a bout of risk aversion in global markets on Monday, at one point sending Bitcoin down

Cryptocurrencies plunged on Monday as a global stock selloff and broader risk aversion battered digital assets. At one point, Bitcoin dropped more than 16% and second-ranked Ether fell by over 20%.

Top token Bitcoin traded 11% lower at $52,680 by 8:39 a.m. in London, adding to a 13.1% drop last week that was the worst since the period when the FTX exchange imploded.

After falling to as low as $49,080, Bitcoin recovered somewhat to trade above the $50,000 level. Ether shed over a fifth of its value before paring some of the slide to change hands at $2,342. Most major coins nursed losses.

The declines come as a global stock selloff intensifies, reflecting concerns about the economic outlook and whether heavy investment into artificial intelligence will live up to the hype. Geopolitical tension is rising in the Middle East, adding to investor skittishness.

US exchange-traded funds for Bitcoin suffered their largest outflows in about three months on Aug. 2. One question is whether the products will attract dip buyers when they resume trading, or witness a deeper efflux.

Digital assets are a victim in part of the unwinding yen carry trade, as speculators adjust to higher interest rates in Japan, according to Hayden Hughes, head of crypto investments at family office Evergreen Growth.

“Those investors are also fighting a drastic increase in hedging costs based on the volatility in the US dollar-Japanese yen trading pair,” Hughes said.

Bitcoin has been buffeted by a range of factors since hitting a record of $73,798 in March. That includes US political flux as pro-crypto Republican Donald Trump and Democratic opponent Vice President Kamala Harris — who has yet to detail a digital-asset policy stance — lock horns in the presidential race.

Also hanging over the market are possible sales of Bitcoin seized by governments and the risk of a supply overhang from tokens returned to creditors through bankruptcy proceedings.

Bond traders have amplified bets on US interest-rate cuts beginning in September to support economic expansion. The prospect of less restrictive monetary policy is actually “a good thing for crypto,” said Sean Farrell, head of digital-asset strategy at Fundstrat Global Advisors LLC.

“The Bitcoin downturn is part of a broader market sell-off as a result of the Fed raising interest rates and slowing down quantitative easing,” Khushboo Khullar, a venture partner at Lightning Ventures, which invests in Bitcoin-linked companies, told Valor塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵塵

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