The cryptocurrency market fell victim to a massive selloff on Monday as several large exchanges either halted sales or announced layoffs, and with Bitcoin plunging to its lowest price in 18 months, experts warn that the ongoing “bloodbath” will only result in more selling pressure on stocks.
The price of Bitcoin dropped 17% to below $23,000 on Monday, its lowest level since December 2020, after crypto lending company Celsius first sparked fears by suspending withdrawals due to “extreme market conditions.”
Amid the selloff, Binance was forced to halt its exchange due to a backlog issue, while crypto firm BlockFi later announced it was laying off 20% of its workforce due to the challenging market environment.
Experts say that the crypto collapse on Monday is yet another sign of the risk-averse sentiment in markets, as investors flee to safer bets amid a backdrop of rising rates and recession fears.
“The cryptocurrency bitcoin has been a great gauge of investors’ risk threshold for equities” and the recent plunge in prices can only mean more bad news for the broader stock market, predicts JC O’Hara, chief market technician at MKM Partners.
“We could easily see a pullback [in Bitcoin prices] to $19,500,” he predicts, adding a continued selloff would certainly be a “bearish read through for stocks.”
It has been “a rough few days for crypto traders” as confidence in crypto markets “took a big hit” amid the “bloodbath” that has occurred, says Oanda senior market analyst Edward Moya.