Bitcoin briefly tumbles below $50,000 for the first time since February

Cryptocurrencies tumbled amid a global market sell-off spurred by recession fears.

The price of bitcoin was last lower by 7% on Monday at $50,193.00, according to Coin Metrics, and is on pace for its worst day since June 2022. At one point, it fell to $49,111.10, its lowest level since Feb. 13. Just seven days prior, on July 20, it climbed as high as $69,982.

“Thirty percent slumps, as scary as they are, are par for the course during bull markets and it’s encouraging bitcoin bounced back above $50,000,” said Nexo co-founder Antoni Trenchev. “But make no mistake, we are in a choppy, volatile market environment … the moment to turn bullish will be when bitcoin retakes its 200-day moving average, which typically tells us if we are in a bull or bear market, at $61,500.”

Ether dropped 9% to $2,481.85, recovering earlier losses that at one point erased its year-to-date gain.

Crypto stocks were among the hardest hit. Coinbase took a 19% dip, while MicroStrategy slid 26%. Mining stocks suffered double-digit losses, too.

The moves follow a broader market sell-off that began last week, when a weaker-than-anticipated July jobs report renewed investor fears of a recession. The tech-heavy Nasdaq Composite entered a correction. Japan stocks entered a bear market Monday after plunging more than 12% overnight, its worst one-day sell-off since 1987.

“Until last Wednesday, everybody was thinking that inflation was going down gradually and the economy was relatively strong, so the Fed would start cutting rates with successful soft landing of the economy,” said Yuya Hasegawa, crypto market analyst at Japanese bitcoin exchange Bitbank. “However, July’s U.S. manufacturing PMI and jobs report came in way weaker than the market expected — and now [investors] are worrying about the possibility of recession and dumping risk assets.”

“That said … the market’s reaction has been a tad excessive, given there is no absolute evidence that the economy is in recession yet,” he continued. “We will likely see some recoil this week.”

On top of economic and geopolitical concerns, crypto investors have been contending with sell pressure from Mt. Gox distributions and decreasing odds of a second Donald Trump presidency in the U.S. Polls on Polymarket, an Ethereum-based prediction market platform, show the gap between Trump and Vice President Kamala Harris has narrowed significantly since President Joe Biden dropped out of the race on July 21.

Bitcoin is already down about 16% for the month of August, a typically sluggish month for risk assets, and below the $55,000 floor that has supported it for much of the year. If it fails to recover, it could be its worst month since June 2022, when it lost about 37%.

Bitcoin is still holding on to a year-to-date gain of 29%, but the current turmoil in crypto prices has investors doubting the validity of the coin’s narrative as a hedge against uncertainty.

“The bitcoin as a hedge narrative is misleading,” Hasegawa said. “It does work as a hedge against fiat currency but it still is a risk asset. In the long run, I believe it is better to hold bitcoin than any fiat currencies, but investors tend to sell high-volatility assets first when risk arises.”

— CNBC’s Gina Francolla contributed reporting.