Bitcoin slumped on Monday, with the world’s largest cryptocurrency down more than 7 per cent and on track for its biggest daily percentage fall since March, as equities also declined.
Bitcoin was last down 7.3 per cent at US$84,555, falling to a more than one-week low below US$84,000.
The move follows bitcoin’s biggest monthly drop since mid-2021. Bitcoin shed more than US$18,000 in November, as a record amount of money rushed out of the market, making this its largest dollar loss since May 2021, when a number of cryptocurrencies collapsed.
Adding to bearish sentiment around bitcoin on Monday, Strategy - the largest corporate holder of bitcoin - cut its earnings forecast for 2025, citing the weak run in bitcoin. Strategy’s shares were last down more than 11 per cent.
“Bitcoin seems to be suffering from a fading enthusiasm across crypto as well as the tech world,” said Juan Perez, director of trading at Monex USA in Washington.
“The negativity at the moment seems tied to growing concerns about increased market concentration and questionable sustainability of overall growth in that sector, considering the issues of infrastructure as well as less cooperation in trade globally,” he said.
Ether also fell on Monday and was last 9.5 per cent lower at US$2,735. It lost some 22 per cent in value in November, the most since February’s 32 per cent slide.
Stocks have sold off recently on concerns about exuberance over the artificial intelligence trade and lofty valuations in technology shares.
Stocks were lower on Monday, with MSCI’s gauge of stocks across the globe down 0.22 per cent at 1,002.97, and all three major U.S. stock indexes moderately lower.
Given its short lifespan, there is not much seasonality to guide traders’ expectations for how bitcoin usually behaves in December.
On average, bitcoin has tended to rise by around 9.7 per cent in December, ranking it third in terms of performance, with October being the strongest month, with an average gain of 16.6 per cent, and September, the weakest month, with an average loss of 3.5 per cent.
Some strategists were keeping a close eye on bitcoin’s correlation with the stock market at the moment. Some see bitcoin as a possible leading indicator for risk assets.
But Marc Chandler, chief market strategist at Bannockburn Capital Markets in New York, said to him, the key is that “people are talking about” what is happening to bitcoin. “I see a lot of people trying to tie the selloff in crypto to the selloff in the other asset markets. But I think we need to test the narrative. It’s just not clear ... but we have to pay attention to it.”
XTB research director Kathleen Brooks said in a note: ”Bitcoin tends to be a leading indicator for overall risk sentiment right now, and its slide does not bode well for stocks at the start of this month.”
“There is no obvious driver (on Monday). However, the sharp decline in volatility last week, the VIX fell back below the average for the last 12 months, may have unnerved some investors who remain concerned about an uncertain outlook into year-end,” she said.
CME bitcoin futures also show the growing bearishness.
Bitcoin futures that expire in three months’ time are trading at their smallest premium to those that expire this month in at least a year, reflecting how investors are less willing to bank on a sustained rise in the price over time.
Jefferies strategist Mohit Kumar said a number of crypto-negative factors were adding to the pressure on bitcoin on Monday.
S&P Global downgraded its rating of Tether, the world’s largest stablecoin last week, citing an increase in higher-risk assets in its reserves and “persistent gaps in disclosure,” which Tether said it “strongly disagrees” with.
Crypto company shares were down as well, with Coinbase Global last off 6 per cent.
Since hitting a record of around US$4.3 trillion in size, the crypto market has lost over US$1 trillion in value, according to CoinGecko.