The cryptocurrency market took a sharp dive on Monday, just as US stock markets opened to another wave of selling pressure. Bitcoin, Ethereum, and other major digital assets saw significant losses within the last hour, following a steep drop in tech stocks. Investors are rattled, and the fear in the market is at its highest level in months.
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Bitcoin and Ethereum Struggle to Hold Key Levels
Bitcoin, which had been trading above $82,000 over the weekend, suddenly lost 2.5% within an hour and briefly dipped below $80,000. Although it quickly rebounded slightly, the sell-off signals that investors are uneasy.
Ethereum suffered even more, dropping over 3.5% and barely managing to hold above the critical $2,000 support level. A further breakdown could trigger even more panic selling.
XRP and Solana (SOL) were also hit hard. XRP is barely clinging above $2, trading at just $2.09, while Solana saw the worst decline among major cryptocurrencies. SOL has lost over 4.5% in the last hour, sinking to $120 – a level not seen in over a year. Over the past week alone, Solana has tumbled 25%, shaking investor confidence.
Meanwhile, the Crypto Fear and Greed Index has plunged into “extreme fear” territory, currently sitting at just 20. This level suggests that traders are deeply anxious, and further market turmoil could be ahead.
What’s Causing the Crypto Sell-Off?
The sudden drop in crypto prices is closely tied to what’s happening in the US stock market. When markets opened on Monday, the “Magnificent Seven” stocks – Nvidia, Tesla, Apple, Microsoft, Amazon, Meta, and Alphabet – tumbled, dragging the broader indexes down.
Tesla led the sell-off, losing over 5%, while Nvidia was down nearly 4%. The S&P 500, which suffered its worst week since September, continued to decline, down another 1.3%. The Nasdaq Composite dropped more than 2%, officially entering correction territory after falling 10% from its recent high.
Why does this matter for crypto? It’s simple – when stock markets are struggling, investors often pull back from risky assets like cryptocurrencies. This is exactly what we’re seeing now.
Investors Fear a Bigger Market Correction
Wall Street analysts have been warning that the stock market is vulnerable to a deeper pullback. RBC’s equity strategy team believes the S&P 500 could fall by as much as 20% from its recent peak. Meanwhile, Morgan Stanley’s Mike Wilson predicts another 5% drop in the near term.
Adding to the concerns, President Trump recently declined to rule out a potential recession, calling the current economic situation a “period of transition”. His trade policies have been making investors nervous, particularly as new tariffs on Mexico and Canada loom.
If stocks continue to slide, crypto could face even more selling pressure. While Bitcoin and Ethereum have been relatively resilient in recent months, they are still heavily influenced by broader financial markets.
What to Expect Next
The big test for crypto markets will come on Wednesday when the latest US inflation data is released. If inflation remains high, it could push the Federal Reserve to keep interest rates elevated for longer – something that would be bad news for both stocks and crypto.
For now, all eyes are on Bitcoin’s ability to hold above $80,000 and Ethereum’s battle to stay above $2,000. If those levels break, we could see a much steeper sell-off in the coming days.
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