Bitcoin was down about 10% Monday morning, falling to under $42.5k, its lowest price in over a month.
Ether, the world’s largest crypto after Bitcoin, was down about 8%, trading around $3,106. Smaller cryptos like Cardano and Solana were also down on Monday. Overall, the value of the global cryptocurrency market hit a low of $1.9 trillion after a loss of $250 billion.
The crypto market seems to be caught up in the global sell-off of risk assets, partially triggered by concerns about Chinese real estate developer Evergrande.
Evergrande currently has a debt of $300 billion and has warned investors in the past weeks that it may default on this debt. The company is so massive that its collapse would not only hurt the Chinese economy, but could also potentially affect global markets.
The sell-off may also be related to the Federal Reserve meeting scheduled to begin Tuesday. Some investors are worried that the bank will begin pulling back monetary stimulus by tapering its purchases of Treasury bonds and mortgage-backed securities, despite high unemployment and surging inflation.
Major U.S. indexes have already seen drops this month as a result of growing concerns about the still-raging COVID-19 Delta variant.
Cryptos specifically have also been subject to increased regulatory scrutiny recently, which may have contributed to Monday’s crypto panic-selling.
SEC Chair Gary Gensler told the Senate Banking Committee last week that crypto regulation is a top priority for the regulator, although what crypto regulation will look like is still unclear.
Meanwhile, several U.S. agencies have begun investigating crypto. According to a recent Bloomberg report, the CFTC is currently investigating Binance, the largest crypto exchange in the world, for insider trading and market manipulation.
Earlier this month, the SEC threatened to sue Coinbase if the company launched its interest-earning product, Lend. Coinbase has since announced it will not launch the product.
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