As the artificial intelligence (AI) trade in Asian markets came under fresh selling pressure, Ethereum and XRP led declines among major cryptocurrencies. Goldman Sachs cut its target for South Korea's Kospi index by 25%.
In early Asian trading on Monday, Bitcoin fell nearly 2% to about $79,800. Traders reduced risk exposure ahead of this week's Federal Reserve policy meeting, while a new wave of selling in AI-related assets dragged technology stocks lower across Asia.
The selloff hit nearly all major cryptocurrencies. Ethereum dropped nearly 3% to just above $2,300; XRP fell about 3% to $1.28. SOL declined 2%, barely holding the $100 mark. According to data, DOGE, ZEC, HYPE and BNB all fell between 1% and 2%, while TRX was the only major cryptocurrency to rise, gaining less than 1%.
Jeff Mei, Chief Operating Officer of cryptocurrency exchange BTSE, said in an email: "This week, all eyes are on the Fed meeting. As Bitcoin falls below the $80,000 mark, investors appear to have already begun reducing risk exposure. While the Fed may not adjust rates this week, what we are watching is how much the Fed Chair hints at a December rate hike. That is the key factor affecting the cryptocurrency market." He added: "Given record-high oil prices, escalating US-Iran tensions and inflationary pressures, the Fed could well take a hawkish stance, which means rates will rise further and liquidity in both cryptocurrency and stock markets will shrink accordingly."
The Fed will announce its rate decision on Wednesday, and traders will closely watch the press conference of Chair Kevin Warsh for any signals of a possible December rate hike. Rising interest rates push up borrowing costs and tend to drive capital away from riskier assets such as cryptocurrencies.
In Asian markets, the selloff in AI-related stocks continued. South Korea's Kospi index fell 1% after Goldman Sachs strategists cut their 12-month target for the index by 25%. Because chipmakers such as Samsung Electronics carry heavy weight in the Kospi, traders often view the index as an important gauge of AI investment sentiment. In Japan's Nikkei index, chip stocks led declines. Nasdaq 100 futures fell 0.1% as investors braced for earnings from major US technology companies this week. The MSCI Asia-Pacific index dropped 0.1%. It had previously fallen for four consecutive weeks, its longest losing streak since April, and is still struggling to rebound.
A pullback in oil prices offered some respite to the market. After US President Trump said the time had come to decide whether to reach a deal with Iran or resume military strikes, Brent crude fell 2% from a six-month high to about $114 per barrel. US Treasury prices rose.
Bitcoin needs to reclaim $82,500 for buyers to view this week's decline as a brief correction. That level had originally been support for Bitcoin but was lost last Thursday.
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