The declining risk appetite in the stock market is increasingly impacting Bitcoin as well. On Monday, the value of the cryptocurrency dropped to $53,000 in early trading. This was about 14 percent or $8,500 less than before the weekend.
“It’s a strong reminder that Bitcoin and crypto in general are risky assets and are located at the extreme end of the risk spectrum,” commented Tony Sycamore, market analyst at the financial services provider IG, on the development. The price of Bitcoin had already plummeted significantly in the previous week. With the loss of value on Monday, it fell back to the level of late February after reaching a record high of over $70,000 in March.
In addition to Bitcoin, other cryptocurrencies also saw significant losses. The price of Ether, for instance, plummeted by about 15 percent to $2,340. Overall, the market capitalization of all cryptocurrencies sharply decreased to $1.85 trillion, a drop of 14 percent. Bitcoin last held a total share of 56 percent.
Recently, there has been an increasing aversion to risk among investors in the financial markets. The reasons are diverse, but according to an analysis by ZEIT-ONLINE author Sina Osterholt, they can primarily be explained by a weakening US economy. On one hand, the unemployment rate in July surprisingly rose to 4.3 percent. Moreover, the US Federal Reserve hinted at wanting to lower interest rates in September. Both are signs, according to portfolio manager André Stagge, that the US economy is not doing well. Additionally, the prospect of political changes following the presidential election in the US is influencing the willingness of investors to invest.
The declining risk appetite in the stock market is increasingly impacting Bitcoin as well. On Monday, the value of the cryptocurrency dropped to $53,000 in early trading. This was about 14 percent or $8,500 less than before the weekend.
“It’s a strong reminder that Bitcoin and crypto in general are risky assets and are located at the extreme end of the risk spectrum,” commented Tony Sycamore, market analyst at the financial services provider IG, on the development. The price of Bitcoin had already plummeted significantly in the previous week. With the loss of value on Monday, it fell back to the level of late February after reaching a record high of over $70,000 in March.