Bitcoin prices fell sharply amid the global sell-off in equities.
Luke MacGregor | Bloomberg | Getty Images
The price of bitcoin dropped sharply Monday as investors began shedding risk amid a global equity markets decline.
While bitcoin is often called a safe haven asset, the growing reality is its price tends to go down amid broader declines in risk assets. Also much like stocks, bitcoin’s price usually experiences a September slide.
Bitcoin lost 10% Monday and last traded at $42,634 according to Coin Metrics. The broader crypto market is in the red as well, with ether last down 12% to $2,985.95.
Global equity markets are sliding as investors fear spreading risk from a shakeout in China’s property market tied to highly indebted developer Evergrande. Investors are also focused on the the Federal Reserve and whether it will signal its readiness to start removing monetary stimulus from the economy. The central bank will begin its two-day meeting Tuesday.
The crypto decline comes as uncertainty about the regulation of stablecoins intensifies. The Financial Stability Oversight Council could designate them as systemically risky, the New York Times reported over the weekend, which could subject them and their operators to heavy regulation.
The President’s Working Group on Financial Markets is working up a report on stablecoins and the Fed is expected to put out a report on central bank digital currencies this month that could touch on stablecoin risks.
While bitcoin was sliding its older rival, gold, was in the green with futures up 0.4%.