The cryptocurrency was last trading at $29,770 as of 3:25 a.m. ET, down about 55% from its record high of $64,870 on April 14.
The broad sell-off led to a drop of $98 billion in the value of the entire cryptocurrency market, according to data from CoinMarketCap.
“Bitcoin has not been immune to market volatility and is another casualty of the sell-off across financial markets. Investors edged away from crypto wallets after stocks plunged,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
On Monday, global markets were thrown into disarray over the spike in global COVID-19 cases. The Dow Jones index declined 2.1% in its worst day since October. Investors are concerned that new outbreaks could disrupt global growth and hammer economies that have been steadily recovering.
“Fears over peak economic data and a resurgence in COVID cases has the market on edge,” said Ryan Detrick, chief market strategist at LPL Financial, adding that investors are more than due for some turbulence.
A JPMorgan strategist told Insider last month that institutional investors would be lured back into buying bitcoin if it drops below $30,000. He didn’t think the range between $50,000 to $60,000 was attractive to them. But Edward Moya, a senior analyst from OANDA, said a break below the $30,000 level could see a “tremendous amount of momentum selling.”
Some bitcoin bulls have long argued the asset is a hedge against inflation due to its fixed supply, but its 3% gain so far this year is now much lower than the S&P 500’s 13% advance.
Hot on the heels of China’s ban on the use of digital assets as currencies, the spread of the Delta variant across the US and the world is causing a broad decline in risk assets including bitcoin.
“These developments brought price headwinds and increased volatility,” said Paul Cappelli, a portfolio manager at Galaxy Digital. “As miners and trading desks shut down, substantial selling of assets can follow as business models pivot.”
He noted an estimate from experts that it could take about a year for affected miners and trading desks to relocate their businesses and restore operations.
“As global leadership continues to get more comfortable with bitcoin and regulatory clarity increases, we are confident that the short-term volatility will give way to a stronger asset class,” Cappelli added.
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