Bitcoin (BTC) dropped to its lowest level since early August during Asian trading hours on Wednesday, sinking below $56,000 as global markets, including U.S. and Asian equities, experienced significant losses. Major stocks saw declines of nearly 10%, dragging down the broader cryptocurrency market along with them.
BTC briefly touched $55,500, marking its lowest point since August 8, and wiping out nearly all of the gains it had accumulated over the past month. The CoinDesk 20 (CD20) index, which tracks the largest cryptocurrencies by market capitalization, also suffered, falling almost 6%. Leading altcoins, including Solana (SOL) and Ether (ETH), were particularly hard hit, each dropping over 7%.
On Tuesday, U.S. stock indices such as the Nasdaq 100 and S&P 500 fell as much as 3.5%, setting a negative tone for the historically volatile month of September. Weak manufacturing data from the U.S. renewed fears of an economic slowdown, triggering a wave of sell-offs that reverberated across global markets. The impact was felt strongly in Asia, with Japan’s Nikkei index sliding more than 4% shortly after trading began, worsening the effects of the recent unwinding of the Yen carry trade.
The decline was further exacerbated by the August reading of the Institute for Supply Management’s manufacturing index, which remained below the critical 50 threshold for the fifth consecutive month, despite a slight improvement from July. This index is widely regarded as a key indicator of economic activity in the U.S. manufacturing sector and is often seen as a barometer for the broader economy.
The sharp declines in both equity and cryptocurrency markets highlight the deep interconnectedness of global financial systems. Investors are now closely watching upcoming economic indicators, including the U.S. jobs report and the Federal Reserve’s next moves on monetary policy, which will be crucial in determining the near-term direction of Bitcoin and other risk-sensitive assets.
Bitcoin’s fall below $56,000, in tandem with the sell-off in global equities, showcase the cryptocurrency market’s vulnerability to broader macroeconomic trends as investors fell short of the digital currency due to global decline.