Bitcoin briefly slipped under the $20,000 mark in Asian afternoon hours amid a drop in the Asian and European equity markets.
Bitcoin fell to $19,880, revisiting levels from last week, before gaining some $300 at writing time. The asset fell to as low as $17,710 in mid-June as investors took money off risky assets amid a poor macroeconomic environment.
Bitcoin fell to last week's support amid revived growth concerns. (TradingView)
Inflation rose to a nearly 37-year high of 10% in Spain, denting investor sentiment in Europe. The Stoxx Europe 600 index fell 0.84%, while Germany’s DAX dropped 1.84%. Stocks in Asia also declined, with Japan’s Nikkei falling 0.92% and the Shanghai Composite shedding 1.40% despite some Chinese cities reducing quarantine requirements on Tuesday.
Wells Fargo said in a Tuesday note that a fall in equity prices was likely to “take time to repair.” In the U.S., the S&P 500 has fallen more than 20% from its December 2021 peak – putting it in a technical “bear market” – as inflation hit a 28-year record in May.
“For now we favor patience before committing new cash to equities,” the Wells team wrote. “With the Federal Reserve just beginning the tightening cycle, we have shifted our investment preferences away from economically sensitive assets and toward more quality-oriented and defensive assets.”
The Wells note came as New York Federal Reserve President John Williams said Tuesday he expects the “U.S. economy to slow,” according to MarketWatch.
Bitcoin has traded similar to risky technology stocks in the past year, meaning further downside in popular tech bets could see the world’s largest cryptocurrency dropping to levels previously seen before 2018.