Bitcoin prices have fallen sharply amid the global sell-off of stocks.
Luc MacGregor | Bloomberg | Getty Images
The price of bitcoin fell sharply on Monday as investors began to reduce risk amid falling global stock markets.
While bitcoin is often referred to as a safe haven asset, the growing reality is that its price tends to fall amid a broader decline in risky assets. Much like stocks, the price of bitcoin typically goes down in September.
Bitcoin lost 10% on Monday and last traded at $ 42,634 according to Coin Metrics. The broader crypto market is also in the red, with Ether dropping 12% to $ 2,985.95.
Global stock markets are down as investors fear spreading the risk of a disruption in the Chinese real estate market linked to heavily indebted developer Evergrande. Investors are also focusing on the Federal Reserve and whether it will signal its willingness to start removing monetary stimulus from the economy. The central bank will begin its two-day meeting on Tuesday.
The crypto decline comes as uncertainty over the regulation of stablecoins intensifies. The Financial Stability Oversight Council could designate them as at systemic risk, the New York Times reported over the weekend, which could subject them and their operators to strict regulation.
The president’s financial markets task force is preparing a report on stable coins and the Fed is expected to release a report this month on central bank digital currencies that may address the risks associated with stable coins.
As bitcoin slipped, its old rival, gold, was in the green with futures contracts up 0.4%.