Bitcoin and Ether plummeted to multi-month lows as concerns over a potential U.S. recession and weak economic data rattled financial markets, leading investors to seek safe-haven assets.

Earlier this year, the crypto markets received a boost when the U.S. Securities and Exchange Commission approved an exchange-traded fund tracking the spot prices of Bitcoin and Ether.

However, recent market dynamics have shifted dramatically.

Looming recession

Bitcoin, along with global equities, has suffered in a broad selloff driven by fears of a looming U.S. recession and rising geopolitical tensions.

Since hitting a record high in March, Bitcoin has lost over a third of its value.

Tony Sycamore, a market analyst at IG, commented, “It’s a big reminder that Bitcoin and crypto in general are risk assets and sit at the pointy end of the risk spectrum.”

On Monday, Bitcoin fell 13% from its Sunday close to $51,560, marking its largest one-day decline since November 2022 and its lowest level since February.

Research Analyst Matteo Greco says “The negative market trend is likely influenced by several macroeconomic factors.”

“The Bank of Japan (BOJ) recently raised interest rates for the first time in 17 years due to concerns over the Yen’s declining purchasing power against the US Dollar.”

“The BOJ also signaled that further rate hikes could be on the horizon, if necessary, which was viewed negatively by risk-on asset markets, triggering widespread selloff.”

Ether sell-off

Ether dropped 17% to $2,277, its lowest point since mid-January.

Sycamore noted that Bitcoin was testing trend channel support in the $54,000 to $53,000 range and needed to hold at that level to “prevent further capitulation towards $48,000.”

Shares of U.S. crypto-related stocks listed in Frankfurt also took a hit in early trading on Monday.

Coinbase fell over 18%, while shares in mining companies Riot Platforms and Marathon Digital dropped by 17.7% and 20%, respectively.