Bitcoin falls 10% as risky assets fall globally. The price of bitcoin fell substantially on Monday as investors began to reduce their exposure. To risk in the wake of a slump in global equity markets.
Many people have claimed that bitcoin is most valuable as a safe-haven asset, but that narrative. May be changing as consumers understand that bitcoin’s price often falls in tandem. With broader decreases in risky assets like stocks and bonds. Bitcoin’s advance this year has coincided with the risk-on surge, and the cryptocurrency. Like stocks, is prone to significant falls in September, according to the CME Group.
Bitcoin dropped as much as 10% in the early hours of Monday morning. According to Coin Metrics, it was down more than 7 percent at $43,790.25 at the time of writing. Ethereum, as well as crypto-adjacent equities, fell 8.5 percent to $3,060.80, putting the broader crypto market. In the red for the second day running. Coinbase and Microstrategy both had their stock prices fall by 3.5 percent and 4 percent, respectively. While Square saw its stock price fall by 2 percent. Riot Blockchain declined 6 percent and Marathon Digital fell 5 percent, respectively. In the crypto mining sector.
Leah Wald, CEO of Valkyrie Investments, told CNBC that the sell-off is a continuation. Of a well-established pattern in which traders liquidate their riskier assets to cover margin calls. Or stay on the sidelines until markets calm down and they feel more comfortable returning to riskier holdings. “If there was ever a time when bitcoin had the opportunity to establish itself. As a safe haven or as digital gold, it appears to be now, with U.S. Firms suggesting that their earnings calls will reveal disappointing results.”
Bitcoin usually falls with the markets
Bitcoin tends to fall with the According to Jim Paulsen, chief investment strategist at Leuthold Group. Although bitcoin tends to decline with the broader markets. It has “virtually no correlation” to stocks.
Bitcoin, he said, “can go down with stocks, and I agree it typically does,”. But “it goes down differently,” he told CNBC. “It’s a great asset to diversify the portfolio. That can help reduce volatility, but it doesn’t imply it won’t participate in risk-off periods. Safe haven is not the same as diversification.
Paulsen noted that part of the reason bitcoin has been called a safe haven is because it is a money. Which was part of the original white paper’s vision.
“Because it’s in the currency bucket, it’s seen as a safe haven because the dollar is a safe haven,” he said. “But this is as far from a money as you can get. It is a medium of commerce, not a currency.”
Gold futures rose 0.8% to $1,765.40 an ounce, while bitcoin fell.
Investors fear a shakeout in China’s property market linked to heavily indebted developer Evergrande. Investors are also watching the Federal Reserve to see if it will begin reducing monetary assistance from the economy. The two-day summit starts Tuesday.
Since the “Covid era” began, investors have learned to cherish 24-hour liquidity, according to Fundstrat’s Tom Lee.
“Cash is more appealing to both institutions and people because it is easier to liquidate. “I assume that has a lot to do with risk off in Asia,” Lee said on CNBC’s Tech Check Monday. “Today’s decrease in bitcoin is not alarming, but it does illustrate that people value liquidity.”