Leading cryptocurrencies extended losses Monday, mirroring the stock rout, as investors get jittery over recession concerns.

What Happened: Bitcoin sank below $77,000 to hit a four-month low. The leading cryptocurrency was down 29% from its all-time high, wiping away nearly all of the gains since Trump's victory in the presidential elections.

Ethereum slipped below $1,800, its lowest since October 2023. Year-to-date, the second-largest cryptocurrency has plunged over 45%.

The downturn comes despite President Donald Trump signing an executive order for a Strategic Bitcoin Reserve last week.

About $926 million was liquidated from the cryptocurrency market in the last 24 hours due to the slump, with $742 million in long positions getting erased.

That said, Bitcoin's recovery to $85,000 would liquidate about a billion in short positions. 

Bitcoin's Open Interest fell 3.83% over the last 24 hours, while the number of traders positioned short on the asset soared to 52% of the total.

The Crypto Fear and Greed Index remained in the "Extreme Fear" zone, signaling anticipation of further downsides.

Top Gainers (24-Hours)

The global cryptocurrency market capitalization stood at $2.54 trillion, contracting 4.25% in the last 24 hours.

Stocks came crashing down Monday. The Dow Jones Industrial Average tumbled 890 points, or 2.08%, to close at 41,911.71. The S&P 500 slipped 2.69%, ending at 5,614.56, while the tech-heavy Nasdaq Composite plunged 4% to close at a six-month low of 17,468.32.

Concerns over the U.S. economy weighed on the market after Trump seemed to acknowledge the possibility of a U.S. recession in an interview over the weekend.

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Analyst Notes: Well-known on-chain analytics firm CryptoQuant assessed whether the prevailing market phase was the beginning of a bear or bull dip.

"In a typical bull market, people move their sats in profit, resulting in an SOPR greater than 1, unlike in a bear market. From this perspective, the bull market still seems to be in play," the firm said, referring to the Spent Output Profit Ratio, a metric used to measure the profitability of transactions.

CryptoQuant also noted that the funding rates still resembled the 2020-21 bull market pattern.

Arthur Hayes, co-founder of cryptocurrency exchange BitMEX and Chief Investment Officer at Maelstrom Fund, urged his followers to remain patient.

"BTC likely bottoms around $70,000. 36% correction from $110,000 ATH, v normal for a bull market," Hayes said. 

Hayes urged that risk-averse investors wait until the central bank eases monetary policy before deploying capital.

Photo by Avi Rozen on Shutterstock

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