Technology
Bitcoin plunges 10% amid selling pressures in global stocks, regulatory concerns
The price of bitcoin dropped sharply Monday as investors began shedding risk amid a global equity markets decline.
While bitcoin is often called a safe-haven asset, the growing reality is its price tends to go down amid broader declines in risk assets. Bitcoin’s rally this year has coincided with the broader risk-on rally and, much like stocks, the digital currency is prone to sharp declines in September.
Bitcoin lost as much as 10% on Monday morning. It was last down 7% at $43,953.87, according to Coin Metrics. The broader crypto market is in the red too, with ether last down 8% to $3,064.29.
Global equity markets are sliding as investors fear spreading risk from a shakeout in China’s property market tied to highly indebted developer Evergrande. Investors are also focused on the Federal Reserve and whether it will signal its readiness to start removing monetary stimulus from the economy. The central bank will begin its two-day meeting Tuesday.
Bitcoin traded above $50,000 earlier this month, topping a key psychological resistance level for trader. Now, however, the cryptocurrency is below its 50-day moving average of $46,514, which analysts and traders look to for a change up or down and to get a sense of the intermediate-term trend.
The crypto decline comes as uncertainty about the regulation of stablecoins intensifies. The Financial Stability Oversight Council could designate them as systemically risky, The New York Times reported over the weekend. This could subject them and their operators to heavy regulation.
While bitcoin was sliding, gold futures climbed 0.8% to $1,765.70 per ounce.
The prices of other cryptocurrencies plunged as concerns over the spillover risk to the global economy from Chinese property group Evergrande's troubles rippled over to wider markets.
SOURCE: CNBC