Bitcoin tumbles as risk assets plunge in global market rout

• Bitcoin dropped on Monday amid the global market meltdown.
• Crypto has not been spared the carnage as traders eye a growing risk of a US recession.
• Ether was also down sharply, falling 12% shortly after 12:00 p.m. ET.

Bitcoin dropped on Monday amid the broad sell-off across financial markets that kicked off last week.

The world's biggest cryptocurrency was down as much as 19% over the weekend, though it pared that loss to about 7% shortly after noon on Monday. The token was trading at $54,934 at 12:24 p.m. ET.

Ethereum, the world's second-largest crypt, was also down, trading 12% lower at $2,488.

The sell-off in crypto comes as risk assets plunge in a global market rout caused by worries over the state of the US economy.

A disappointing jobs report and weak manufacturing data last week raised concerns that the Federal Reserve has waited too long to cut rates.

Some market observers have said that the historic market rout could prompt an emergency rate cut from the central bank in the next week . Such a move would be a rare acknowledgment by the Fed of the dire conditions facing the economy. Historically, an emergency cut has been reserved for "black swan" events like the pandemic and the terror attacks of September 11.

The bout of stock market volatility is the strongest since the onset of COVID-19 in 2020. Japan's Nikkei 225 index dropped 12% early Monday in its worst single-day decline since 1987, and markets in South Korea and Europe also plunged.

With weaker job growth than expected, "financial markets indicate that the risk is no longer balanced between growth and inflation," analysts from Bank of America said in a Sunday note.

The analysts aren't optimistic that new data in the coming weeks could sway markets.

"Recent data suggests growth is slowing faster than expected and there are no major data releases or earnings over the coming weeks that could reverse the narrative," they said.

The upcoming release of consumer price index data on August 14 could "be a major downside catalyst if it comes in hot," they added."

Some crypto experts remain optimistic that the sell-off is a stopover before further gains materialize.

"Judging from historical trends in the crypto market, before the market forms a true bullish drive, it needs to experience a sharp decline to reduce the long positions of the contract in order to reduce the selling pressure for future rises," Gracy Chen, CEO of crypto exchange company Bitget, said in a Monday note.