Crypto market plunges amid macroeconomy fears

Poor macroeconomic sentiment and increasing fears of a recession in the West laid the backdrop for cryptocurrencies to lose 4% of their market capitalization on Monday, with several major tokens taking hits of up to 8%. Bitcoin traded below pivotal support of $40,000 during European trading hours, reaching its nearly lowest price in a month.

According to Goldman Sachs analysts, the Federal Reserve’s aggressive measures to control inflation could result in a recession. The investment bank put the odds of an economic contraction – a phase of the business cycle in which the economy as a whole is in decline – at about 35% over the next two years.

As a result, Bitcoin (BTC) dropped to under $38,500 during trading hours in Asia to change hands at its lowest point in over a month. That is despite April being a seasonally bullish month for the largest cryptocurrency when prices have risen seven times in April in the past 10 years, data reads.

Ether (ETH) lost the $3,000 mark, falling 10% in the past week. In the past 24 hours, Solana’s SOL and Cardano’s ADA fell 6.6%, while meme coins Shiba Inu (SHIB) and Dogecoin (DOGE) fell as much as 7%, leading losses among major cryptos.

DOGE prices fell after a sudden rally last week buoyed by positive sentiment as speculators bet on Tesla (TSLA) CEO Elon Musk’s intended takeover of social media giant Twitter (TWTR). Prices crossed $0.15 at the time but fell to support at the $0.13 mark over the weekend.

Analysts said the slide in global markets contributed to a fall in Bitcoin and crypto prices.

Alex Kuptsikevich, an analyst at FxPro, told CoinDesk:

“Bitcoin declined for the second week in a row under negative stock market performance. Last week’s noticeable decline in Bitcoin occurred amid a significant drawdown in US stock indices.”

Analysts noted that global markets would have to severely underperform if Bitcoin were to fall further.

“A consolidation scenario below $30K would require an absolute disaster in the financial markets,” Kuptsikevich added. “We have seen steady and impressive demand from long-term buyers as we have fallen into this area.”

Asian markets and U.S. futures fell on Monday amid concerns of faster policy tightening by the Fed. India’s Sensex ended 2.01% lower, and Singapore’s stock index lost nearly 1%. In the U.S., S&P 500 futures opened 0.26% lower, and the tech-heavy Nasdaq slid 0.37%.

Meanwhile, gold reached five-week highs of just under $2,000. Natural gas prices surged to the highest intraday level in more than 13 years.

Noteworthy, tokens outside the crypto top 20 saw even bigger losses. Chainlink’s LINK tokens dropped 9%, Bitcoin Cash’s BCH fell 10%, and Filecoin’s FIL fell 11%. Among a few gainers were Chain’s XCN and Stacks’ STX with upward of 6% in gains in the past 24 hours.