It is not a good day for Bitcoin investors. The world’s leading cryptocurrency is currently trading down over 15% at the time of this writing, to $51,090. But Bitcoin isn’t the only crypto that has sunk over the last 24 hours.
Ethereum has been hit even harder, dropping 22% to $2,250. Other popular cryptocurrencies including BNB, Solana, Dogecoin, XRP, Shiba Inu, and Cardano are all down between 16% and 18%.
Jobs report spooks investors
Investors seem to be nervous about the economy at large and the possibility of a U.S. recession at home. That anxiety started after the U.S. Labor Department released its July jobs report on Friday. That report saw 114,000 jobs added for the month. As CNBC noted, that was much lower than expected (many had expected to see around 185,000 jobs added).
Adding to the bad news was the fact that the unemployment rate rose to 4.3%, its highest level since October 2021.
But the jobs reports wasn’t the only bad news last week. Many major tech companies unveiled their latest earnings, and they were a mixed bag, causing the tech-heavy Nasdaq to lose 3.4% of its value during the week. Major stocks including Apple, Intel, Nvidia, Meta, and Microsoft all got hit hard last week.
The bad jobs numbers and fall in the Nasdaq seem to have had a knock-on effect in global markets this morning, too. Japan’s Nikkei 225 index is currently trading down 12.4% at the time of this writing, to 31,458. That’s a fall of over 4,451, which is more than the 3,836 points it fell in October 1987, in an event known as “Black Monday” (that fall was 14.9%).
And, as of the time of this writing, major U.S. indices are also down including the S&P (down 3%), Dow (down 2%), and Nasdaq (down 4.7%).
Why are Bitcoin and other cryptocurrencies crashing?
As for why Bitcoin and other major cryptocurrencies are dropping this morning, that’s a little harder to pinpoint for certain. However, one possible reason may be down to profit-taking. Some investors may have been alarmed by the losses in the traditional markets last week, so they are extracting their gains from their crypto investments now to help offset those losses.
Another possibility, as CNBC notes, is that if we are headed for a worsening economy and a possible recession, investors may want to get out of riskier assets before the worst of the troubles hit. The price of cryptocurrencies is historically much more volatile than stocks. And volatility equals risk, which is something investors have a reduced appetite for when the economy weakens.
Of course, for Bitcoin, it isn’t all bad news. While the 15% drop in the cryptocurrency over the past 24 hours won’t make investors happy, the world’s leading crypto is still up over 23% year-to-date.
The same optimistic assertion can’t be said for Ethereum, however. That coin’s 22% drop in the past 24 hours has wiped out all the gains it had made this year so far.