Cryptocurrencies slid on Monday amid a bout of investor anxiety in global markets sparked by protests in China against Covid restrictions.

Bitcoin, the largest token, at one point shed 3.2% and was trading at about US$16 170 as of 12.40pm in Tokyo. Second-ranked ether fell about 4%, while the likes of solana, avalanche and dogecoin suffered even sharper losses.

The nerves stoked by China come during a period of vulnerability for crypto markets, which are on edge over the contagion spreading from the fall of Sam Bankman-Fried’s FTX exchange and sister trading house Alameda Research.

Crypto watchers also pointed to worries about wrapped ether, which is meant to have the same value as ether while allowing access to more applications. Some reports suggested the concerns stemmed from joke Twitter posts falsely claiming a break in the expected peg in the value of wrapped ether and ether.

Markus Thielen, head of research and strategy at crypto lender Matrixport, said he’s “not too concerned” about wrapped ether because it’s based on automatically executing software known as smart contracts.

“This will make it unlikely to be actually manipulated as no person, nor a centralised entity, should be able to manipulate the open-source smart contract,” which can also be checked for bugs or flaws, Thielen added.

The drop in crypto assets on Monday came amid a slide in Asian stocks and US equity futures. One risk in China is that Beijing’s ongoing policy of Covid Zero mobility curbs is an impediment to stabilising domestic demand, said Katrina Ell, senior economist at Moody’s Analytics.

Fretting

Markets may also be fretting that unrest in China will cause further supply-chain constraints globally, said Hayden Hughes, CEO of social trading platform Alpha Impact. Such snarls can make it harder to beat back inflation, leaving interest rates higher.

Bitcoin is down about 21% so far in November, the token’s worst monthly performance since June. This year’s crypto rout has sliced almost 70% off a gauge of the top 100 digital assets.