Topline
Bitcoin dropped below $20,000 Saturday—trading at its lowest levels in over a month—after stocks sold off sharply Friday as investors pulled back from risky assets amid renewed concerns the Federal Reserve’s efforts to fight inflation could tip the economy into recession.
Bitcoin dropped below $20,000 Saturday afternoon, but has since rebounded slightly. (Photo by … [+]
Key Facts
Bitcoin fell to a low of $19,886 Saturday before recovering slightly, trading at $20,055 as of the late afternoon, down 2.93% over the past 24 hours and off 70.1% from a record high of $67,037 in November.
The Dow Jones Industrial Average plummeted more than 1,000 points to 32,283 on Friday after Federal Reserve Chair Jerome Powell warned that soaring inflation will “take some time” to ease and will require the Fed to act “forcefully.”
Other cryptocurrencies fell Saturday, with Dogecoin dropping 3.53% to 6 cents, while Ether sank 4.99%, to $1,481.
Shares of leading crypto broker Coinbase, meanwhile, fell 6.49% Friday to close at $66.74, down sharply from $368.90 in November, amid lower crypto trading volumes in a slumping market.
Key Background
Low interest rates and government stimulus during the Covid-19 pandemic fueled skyrocketing cryptocurrency prices, but they’ve fallen substantially in recent months. Economists are divided on the possibility of recession. On Friday, economists at Goldman Sachs said the odds of entering a recession over the next year are roughly one in three, while economists at Nomura said they believe one will start this year and Bank of America warned a “mild recession” is possible by the end of the year. So far, the Federal Reserve has made two interest rate hikes in its effort to curb inflation, raising its key lending rate 75 basis points in May and again in July, after inflation hit a 40-year high.
Tangent
More than 50% of daily bitcoin trading is likely fake or non-economic, Forbes determined in an analysis published Friday, underlining concerns about the transparency and solidity of crypto markets. In the analysis of 157 crypto exchanges worldwide, Forbes found daily bitcoin volume on June 14 was $128 billion, 51% lower than the $262 billion from the total self-reported volume from multiple sources.
Further Reading
Crypto Funds Post Record $423 Million Outflows As Bitcoin Plunge Rattles Market (Forbes)
Source: https://www.forbes.com/sites/brianbushard/2022/08/27/bitcoin-drops-below-20000-amid-recession-fears/