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Investors angered by financial strains at a Chinese real estate company slumped cryptocurrencies on Monday, with bitcoin (BTC-USD) dropping more than 7%.
As risk-sensitive assets plunged, the leading digital coin lost over $ 3,000, changing hands just below $ 44,000 at midday. These moves were the latest signal that the world’s largest cryptocurrency has failed to achieve the status of a “safe haven” asset that some of its most ardent supporters have promoted, even as debt levels in the world are increasing in response to COVID-19.
With the virus still dominating investor concerns, markets were rocked by the announcement of Evergrande, a major Chinese real estate company on the brink of default. The potential slowdown in China’s economy and Beijing’s aggressive actions against key trade sectors have converged with concerns about the global economy. Meanwhile, a fight is brewing in Washington to raise the US debt limit.
Spillover effects were apparent in the crypto world. According to CoinmarketCap, major payment networks such as Ethereum (ETH-USD), Cardano (ADA-USD), Binance Coin (BNB-USD) and Solana (SOL1-USD) all suffered even greater losses than bitcoin in the in the last 24 hours. : all were offset by at least 8% over the day.
According to the blockchain analysis platform Glassnode, the 7-day moving average of the number of Bitcoin wallet addresses sending money to crypto exchanges reached a 3-month high, signaling increased selling pressure and speculative exchanges.
Considering the fees associated with moving crypto in and out of most centralized crypto exchanges, this increasing volume of flow to the exchanges is an indicator that BTC holders might be looking to sell. Meanwhile, the overall crypto balance on exchanges continues to decline this week.
Although the value of BTC is often described as digital gold, acting as a store of value asset that does not correlate with the stock market, its price decline over the past 24 hours shows signs that Bitcoin’s price today meets risk tolerance. investors.
Nik Bhatia, a crypto watcher and author of the macroeconomics-focused cryptocurrency book, “Layered Money,” pointed out bitcoin’s strong connection to risky assets in his newsletter last Friday, saying the digital coin has ” battled a stock market correlation narrative. ”
Highlighting its correlation with the stock market crash triggered by the pandemic in March 2020, Bhatia said that “bitcoin responds to the global macro environment and is itself a product of it.”
In fact, since peaking at nearly $ 53,000 in September after El Salvador officially introduced bitcoin as legal tender, the crypto unit has lost over $ 8,000.
David Hollerith covers cryptocurrency for Yahoo Finance. Follow it @dshollers.
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For more information on cryptocurrency, see:
Dogecoin, what is it? How to buy it
Ethereum: What is it and how do you invest in it?
The 21 best crypto leaders to watch in the second half of 2021
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