The looming threat of an economic recession and negative macroeconomics have driven down the value of several cryptocurrencies. Indeed, investors appeared to be bothered by a recent note from analysts from Goldman Sachs, which stated that the US Federal Reserve’s aggressive approach to controlling inflation might lead to a recession.
They added that the odds of an economic contraction – a state wherein the entire economy declines – are at around 35% within the next couple of years.
As a result, several cryptos lost up to 4% of their market capitalization as trade opened in Europe on Monday, April 18th, and some big players lost as much as 8%.
Bitcoin, the world’s largest cryptocurrency by market capitalization, fell below its key support amount of $40,000 throughout Asia’s trading day. This is the lowest that Bitcoin has been in more than a month and ironic given how April is usually a bullish month. Over the past decade, the price of Bitcoin has been recorded to have risen seven times in April.
Analysts noted that Bitcoin had declined two weeks in a row, and they are blaming the low performance in the US stock indices as a crucial factor. They warned that the cryptocurrency would fall further if global markets underperform over the next several weeks.
According to FXPro analyst Alex Kuptsikevich, it would take a severe financial crash to bring a consolidation scenario under $30,000 to come into play. So far, however, he still sees steady demand for Bitcoin from long-term buyers.
Meme coins Shiba Inu, and Dogecoin, are down
Meanwhile, Ether fell below 10% over the past week, while Solana and Cardano were down by 6.6% as of the 18th. But it was the meme coins – Shiba Inu and Dogecoin – that took the hardest hit, dropping by around 7%.
While a rush of positive sentiment fueled by speculative bets that Tesla CEO Elon Musk was planning to take over social media platform Twitter rallied the price of Dogecoin last week, prices took a plunge over the weekend. In the middle of the week, the price of Dogecoin hit a high of $0.15 but dropped down to $0.13 by Sunday, April 17th.
Other losers at the start of the week include Chainlink’s LINK token, whose value fell by 9%, Bitcoin Cash which was down by 10%, and Filecoin, which fell to around 11%.
But it wasn’t all bad news for the crypto scene. Chain’s XCN and Stacks’ STX tokens gained around 6% within 24 hours.