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Global markets plummet amid concerns of a U.S. recession, as crypto markets tank

Global markets
TL;DR Breakdown
  • The global markets collapse as the cryptocurrency market’s downturn leads to a billion-dollar liquidation and large firms losing pivotal support.
  • Bitcoin slightly recovers from the weekend lows.
  • Fears surrounding the United States economic recession fuel the global market downturn.

Global markets fell amid growing worries of a U.S. recession, with crypto exchanges tumbling. According to a news report by Reuters, global markets stock indexes dropped significantly, and oil prices plummeted by around 6%. The dollar also ended the day on a high, coming within range of its 20-year high, as investors sought safe havens amid concerns over inflation and slower global economic growth.

Global markets take a nosedive fuelling economic recession fears

According to a report by Bloomberg, global markets reached an all-time low over the weekend and continued into Monday. On Monday, shares in major crypto mining firms dropped even further, mirroring the NYSE stock market.

The growing concerns over the tightening of the Federal Reserve’s monetary policy, which might result in a recession, have dealt the crypto market a heavy blow. Crypto enthusiasts frequently promote Bitcoin as a store of value out of touch with other financial global markets, similar to gold. However, the crypto industry has been among the most severely impacted asset classes by the risk-off global markets climate.

MicroStrategy Inc. shares fell the most since 2017 as the company, which is frequently used as a proxy for Bitcoin, slid with the global cryptocurrency amid a broader selloff in risk assets.

Other stocks exposed to cryptocurrencies, including top miners such as Marathon Digital Holdings, also saw sharp declines. Marathon, the largest public miner in the U.S. by market value, dropped 19%, bringing its year-to-date losses to 63%. Meanwhile, Core Scientific Inc. dropped a record low of 13%, and Riot Blockchain Inc. fell 19% to its lowest level since November 2020.

The S&P 500’s selling accelerated as investors rushed to protect themselves against a weakening economy on Friday. Last week, the United States, Britain, and Australia raised interest rates, and investors geared up for more tightening from regulators as they battle out-of-control inflation.

Global markets are reacting to the prospect that China’s zero-COVID policy will hurt global growth. Concerns about supply chain problems for foreign technology firms in China grew after Shanghai tightened its lockdown for 25 million residents. Additionally, the Russia-Ukraine conflict has exacerbated the economic difficulties for most global markets.

The recent global market downturn has encouraged many crypto traders to go bearish and accept that the price may drop to $28,000, ping some analysts’ contrarian views. Global market investors undoubtedly have to wait and see what happens next for Bitcoin. However, given the continuing macro global events that pressure financial markets, it’s advisable to be prepared for more volatility.

The cryptocurrency market takes a hard hit 

“When it rains, it pours” is a famous saying that has new relevance in the cryptocurrency markets on May 10, as traders confront another day of anguish and Bitcoin’s present price decline brings it to its lowest point in 2022. The floor of support for Bitcoin bulls has been unstable in recent months, as bears have continued to push the price lower.

According to Glassnode, the sudden Bitcoin exchange fee dominance spike to 15.2% is the second-highest ever. It further supports the contention that Bitcoin investors were looking to de-risk, sell, or add collateral to margin due to market volatility.

The Federal Reserve has warned that a rise in interest rates and stablecoins could be dangerous to the U.S. economy. Following the Fed’s half-point rate hike, the United States economy is shedding value, just as many others worldwide have done.

In the midst of a bull market, Bitcoin’s price dropped by more than 11 percent in 24 hours to hit an all-time low of $30,000 for the first time since July 2021. It is over 55 percent lower than its all-time high of $69,000 set last November.

The total market capitalization slid 13% over the 24 hours through Saturday, according to Coinmarketcap. In addition to Cardano (20%), Solana (16%), XRP (13%), BNB (16%), and Ethereum, other top-10 coins had double-digit percentage declines, led by Cardano (20%) and Solana (16%). Even the most robust stablecoins are experiencing downward price fluctuations, as Terra USD’s 1:1 peg to the U.S. dollar loses ground.

In addition to the cryptocurrency global market’s problems, Luna Foundation Guard’s decision to drain $750 million in Bitcoin holdings to back up LUNA’s stablecoin has exacerbated the downturn. With one of the essential Bitcoin-held wallets dumping so much BTC on the market, it put downward pressure on prices. In 24 hours, LUNA dropped approximately 31%.

Good news for cryptocurrency investors: According to Bloomberg, as the selloff in equities slowed and about of calm swept across global markets, Bitcoin rebounded from a swoon below $30,000.

On Tuesday, the world’s largest cryptocurrency appreciated by 5.4 percent and traded at $31,904 in London at 10:15 a.m. Ether advanced 6.4% at one point, as did coins like Solana and Avalanche. The crypto rally occurred as equities rose across Europe, showing how the two asset classes are trading in tandem.

Florence Muchai

Florence Muchai

Florence is a crypto enthusiast and writer who loves to travel. As a digital nomad, she explores the transformative power of blockchain technology. Her writing reflects the limitless possibilities for humanity to connect and grow.

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