Cryptocurrencies experienced a significant downturn on Monday as market risk aversion intensified. Bitcoin plunged over 11%, trading at $53,100, and Ether experienced its steepest decline since 2021, dropping more than 20% before stabilizing at $2,360. Major coins were largely in the red, reflecting a global stock selloff driven by concerns over the economic outlook and the potential overhype of AI investments. Geopolitical tensions in the Middle East further exacerbated investor anxiety.
US Bitcoin exchange-traded funds saw their largest outflows in three months on August 2, raising questions about future investor behavior. The decline in digital assets is partly attributed to the unwinding of the yen carry trade, influenced by rising interest rates in Japan. Bitcoin’s value has been impacted by various factors since its record high of $73,798 in March, including US political uncertainties and potential government sales of seized Bitcoin.