Stock market crash drags crypto down as Bitcoin drops $9k in 24 hours

CRYPTOCURRENCY is being dragged down with a global stock market crash which has seen fears of a potential US recession creating panic among investors.

Japan's Nikkei has triggered most of the worldwide alarm, closing 13% down after crushing losses came perilously close to exceeding 1987's landmark 'Black Monday' crash.

The wave of financial stress has now begun to wash over crypto, with Bitcoin falling from $61,000 yesterday to $49,500 before arresting and recovering slightly to around $52,500.

Ethereum has been hit particularly hard, plummeting 20% in 24 hours from $2,920 to $2,300.

Analysts have pointed to several factors driving the downturn - with many believing economic uncertainty over the upcoming US Presidential Election is forcing traders to pull investments.

A weak payroll report from the US on Friday resulted in stock markets pricing in a probable rate cut by the Federal Reserve next month, as the possibility of a recession being on the horizon rose to 25% - a figure noted by Goldman Sachs over the weekend.

JPMorgan, however, went even further with a 50% likelihood, sparking more widespread alarm.

Economist Michael Feroli suggested officials at the Federal Reserve had the means to avert a financial crisis, but warned their methods may not be fully understood and trusted by a large proportion of traders.

"Now that the Fed looks to be materially behind the curve, we expect a 50 bp (base points) cut at the September meeting, followed by another 50 bp cut in November," he said.

"Indeed, a case could be made for an inter-meeting easing, especially if the data soften further — although Fed officials might worry about how such a move could be (mis)interpreted."

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