The price of bitcoin was sent nosediving on Monday, as investors around the world offloaded their riskier assets amid a broader equities market descent.
The world’s largest cryptocurrency fell by as much as 10% Monday to just above $43,900 at the time of writing, with other cryptocurrencies also joining the downward slide in sympathy. Ether lost as much as 9% and is currently sitting at around $3,090, while XRP plummeted by the most, with losses upwards of 15%.
“This sell-off is the continuation of a well-established pattern where traders cash in their riskier assets to cover margin calls or sit on the sidelines until markets calm down and they feel more comfortable going back into riskier positions,” Valkyrie Investments CEO Leah Wald explained to CNBC. “If ever bitcoin had the opportunity to establish itself as a safe haven or as digital gold, with US companies also signaling their earnings calls are going to reveal poor results, now feels like the time.”
Indeed, the broader selloff that is materializing across crypto markets is in unison with a wider equity market liquidation that is currently gaining momentum around the globe, as fears over China-based property developer Evergrande Group teetering on the cusp of bankruptcy materialize. Investors will also be looking for any new developments from the US Federal Reserve in terms of potential liquidity changes.
In the meantime, speculation has risen regarding the US government’s stance on stablecoins, which could create added uncertainty for crypto markets worldwide. The Biden administration’s Working Group on Financial Markets is currently in the midst of devising a highly-awaited report of central bank digital currencies before the end of September, which will likely also touch base on risks stemming from stablecoins.
However, the recent slump in bitcoin presented a lucrative opportunity for El Salvador, as the South American country’s government purchased an additional 150 new bitcoins. “We just bought the dip. 150 new coins! El Salvador now holds 700 coins,” El Salvador president Nayib Bukele eagerly tweeted on Monday.
Information for this briefing was found via CNBC and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.