Bitcoin experienced a volatile trading day Monday, mirroring global market anxieties fueled by tariff-related recession fears. The cryptocurrency initially plummeted over $10,000 from its Friday high near $85,000, briefly touching a low of $74,420.69 before recovering somewhat in afternoon trading. As of late Monday, Bitcoin was trading at approximately $78,852.00, down less than 1% for the day, according to Coin Metrics. This represents a roughly 30% decline from its January peak.
This rollercoaster ride highlights Bitcoin’s increasing correlation with traditional markets, albeit with some notable differences. David Hernandez, crypto investment specialist at 21Shares, observed, “Today’s relief rally has lifted bitcoin…as traders re-enter the market. Uniquely, bitcoin tends to participate in broad market upside but doesn’t always capitulate at the same time as risk-off moves, highlighting its growing divergence from traditional asset behavior.”
Independent investor and former co-founder of Reflexivity Research, Will Clemente, offered a cautious perspective: “While I generally think we are closer to the end than the beginning of this correction for bitcoin, the window of uncertainty has widened for markets. Bitcoin is not immune when investors need to liquidate assets for margin calls or internal risk management.”
Last week, Bitcoin demonstrated relative stability amidst a broader market meltdown, even as stocks and gold tumbled. However, this week’s price action suggests a delayed reaction to the prevailing negative sentiment. Clemente noted, “Time and time again, it’s been proven that investors still view bitcoin as a risk-on asset, and last week’s relative strength appeared to be bitcoin simply lagging equities. Should equities recover, bitcoin will likely follow.”
Market strategists are closely watching key support levels. Joel Kruger of LMAX pointed to the $74,000 mark, representing Bitcoin’s 2024 peak, as a critical level being tested. Tracy Jin, COO of crypto exchange MEXC, suggested a potential further decline to $68,000.
The current correction isn’t entirely unexpected. Some investors anticipated a pullback since Bitcoin’s record high of $109,350.72 in January, coinciding with record stock market peaks. Kruger noted the “evident” potential for a pullback at the time. Clemente added that by February, it was clear certain policies “were going to create a drag on the economy and likely initiate a correction with valuations near record highs.”
Despite the current volatility, Clemente maintains a long-term bullish outlook for Bitcoin. He believes that increasing deglobalization and geopolitical tensions will ultimately benefit a “decentralized, open source, neutral, scarce reserve asset like bitcoin.”
