Bitcoin
BTC$22 855.29

-3.86%

Ethereum
ETH$1 571.05

-4.53%

Tether
USDT$1.000106

0%

Binance Coin
BNB$307.09

-3.92%

USD Coin
USDC$1.000146

0.02%

XRP
XRP$0.392404

-6.64%

Bitcoin's Price Plunges Below $34,000


12 May 2022

#Bitcoin

The price of bitcoin slid last week after a wider stock sell-off in the U.S. sent the cryptocurrency market into a frenzy, prompting the digital asset to plummet towards $36,000 by late Friday trading. Bitcoin continued to wane over the weekend. The virtual asset traded around lows of $33,983 on Sunday evening, marking a 5.8% decline from its corresponding Friday price. The decline follows a distressing day on Wall Street, in which the Dow Jones Industrial Average fell over 1,000 points on Thursday. Meanwhile, the tech-heavy Nasdaq tumbled 5%. Both indices’ losses marked the worse points decline in a single day of trading since 2020. The Dow and Nasdaq continued their decline on Friday.

Bitcoin dwindled even further on Monday. The digital asset sank to its lowest point since January on Monday. An injured stock market continued to weigh down on bitcoin, which currently appears to be highly correlated with other risk assets like tech stocks.

Early Monday trading saw bitcoin hit $33,266, testing its January low of $32,951. A fall below that level would be its lowest since July of last year. The world’s largest cryptocurrency is now down more than 50% from its all-time high of $68,990 in November 2021.

Bitcoin’s Price Movements Have Been Moving Suspiciously Close to Tech Stocks

Since the beginning of the pandemic, analysts have pointed out bitcoin’s increased correlation to the equity markets. More specifically, the price movements of large tech stocks. This is now true more than ever. Data from Bloomberg shows that the 40-day correlation between the two asset classes stood at 0.70 on Friday- a record high level. Bitcoin’s 40-day correlation with the S&P 500 stock benchmark is at another record high of 0.82. A correlation of 1 implies the two assets are moving in perfect positive correlation, Meanwhile, a reading of -1 suggests perfect negative correlation between the two. A reading of 0 implies no correlation. Whilst many have propelled bitcoin to be a strong portfolio diversifier and safe store of value, the asset’s rising correlation with risky tech further corrodes this argument.

“I think everything within crypto is still classed as a risk asset, and similar to what we’ve seen with the Nasdaq, most crypto currencies are getting pummelled,” remarked Matt Dibb, COO of the Singapore-based crypto platform, Stack Funds.

The tech heavy Nasdaq fell 1.5% last week, and has lost 22% year to date. The index has been weighed down by persisting inflation, forcing the Federal Reserve to hike rates despite slowing growth. Dibb mentioned other factors that assisted bitcoin’s fall over the weekend, including the market’s notoriously low liquidity over the weekends. Investors also weathered some short-lived fears that the stable coin Terra could lose its peg to the dollar.

What’s Next for the World’s Largest Cryptocurrency?

Taking the macro environment into account, markets remain under pressure from inflationary and recession fears. According to Vijay Ayyar, Vice President at the Luno crypto exchange, bitcoin lost key support after falling through the $37,500 level. That could indicate a drop even lower than $30,000. If that happens, the world’s largest cryptocurrency could descend as low as $25,000 before any “significant” moves back up takes place, Ayyar remarked. The high correlation between bitcoin and tech stocks is not one that’s expected to persist, according to the consensus.

“That correlation will over time break down… [if] the Nasdaq falls 3% crypto doesn’t fall 9% like it would have last year,” Michael Novogratz, CEO of Galaxy Digital remarked.

More pain can be expected for the cryptocurrency markets. The unnerving fact amongst analysts is this. Different to the 2008 crisis or the Coronavirus recession, there’s no incoming injection of liquidity to create a V-shaped recovery, as seen previously. Still, with market uncertainty aside, interest from institutions and long-term holders in crypto remains strong. This isn’t expected to weaken any time soon.


Related

Copy Trading Strategies: How to Start Successful Copy Trading
Copy Trading Strategies: How to Start Successful Copy Trading
Bitcoin enters short-term correction
Bitcoin enters short-term correction
Bitcoin recharges with optimism, aims for a $25K area
Bitcoin recharges with optimism, aims for a $25K area
Bitcoin Spring: Will BTC bounce back soon?
Bitcoin Spring: Will BTC bounce back soon?
The leading crypto has grown to 21,150 USD
The leading crypto has grown to 21,150 USD
Bitcoin price nears 3-week high as trader says sub-7% CPI may see $19K
Bitcoin price nears 3-week high as trader says sub-7% CPI may see $19K
How have Bitcoin and Forex affected each other in 2022?
How have Bitcoin and Forex affected each other in 2022?
BTC bounces back from Monday’s low
BTC bounces back from Monday’s low
Bitcoin may be near the bottom, but years from the next FOMO
Bitcoin may be near the bottom, but years from the next FOMO

Top Cryptocurrencies with Price Predictions

# Crypto Prediction Accuracy CVIX Price 24h 7d Market Cap 7d price change
1 Bitcoin (BTC) BTC Bitcoin predictions 64.8% 78 $22 855.29 -3.86% -0.53% $440 592 629 611 BTC 7 days price change
2 Ethereum (ETH) ETH Ethereum predictions 63.2% 83 $1 571.05 -4.53% -3.62% $192 254 948 671 ETH 7 days price change
3 Tether (USDT) USDT Tether predictions 91.6% 1 $1.000106 0% -0.01% $67 818 518 303 USDT 7 days price change
4 Binance Coin (BNB) BNB Binance Coin predictions 69.2% 62 $307.09 -3.92% 0.39% $48 489 817 539 BNB 7 days price change
5 USD Coin (USDC) USDC USD Coin predictions 92.4% 1 $1.000146 0.02% 0.02% $42 719 163 166 USDC 7 days price change
6 XRP (XRP) XRP XRP predictions 66% 65 $0.392404 -6.64% -7.29% $19 935 533 079 XRP 7 days price change
7 Binance USD (BUSD) BUSD Binance USD predictions 96% 1 $1.000168 0% 0.01% $15 734 836 580 BUSD 7 days price change
8 Cardano (ADA) ADA Cardano predictions 64% 72 $0.371921 -6.16% -1.30% $12 866 103 968 ADA 7 days price change
9 Dogecoin (DOGE) DOGE Dogecoin predictions 70% 64 $0.089441 -1.18% 0.71% $11 866 270 466 DOGE 7 days price change
10 Lido stETH (STETH) STETH Lido stETH predictions 95.6% 1 $2 941.39 -0.40% -3.32% $10 258 752 564 STETH 7 days price change
11 Polygon (MATIC) MATIC Polygon predictions 67.2% 74 $1.092517 -6.94% 9.99% $9 542 387 704 MATIC 7 days price change
12 Solana (SOL) SOL Solana predictions 56.4% 94 $23.92 -8.74% -1.24% $8 889 597 245 SOL 7 days price change
13 Polkadot (DOT) DOT Polkadot predictions 58.8% 81 $6.21 -6.54% -5.75% $7 150 468 683 DOT 7 days price change
14 Litecoin (LTC) LTC Litecoin predictions 69.6% 55 $93.29 -1.81% 3.12% $6 732 701 641 LTC 7 days price change
15 SHIBA INU (SHIB) SHIB SHIBA INU predictions 64.4% 80 $0.000012 -4.57% -3.85% $6 339 026 139 SHIB 7 days price change

Be the first to receive Cryptocurrency Price Predictions and Forecasts daily

Get cryptocurrency price predictions, forecasts with analysis and news right to your inbox.

© 2015-2023 Crypto-Rating.com

The usage of this website constitutes acceptance of the following legal information. Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website, including information about the cryptocurrencies and bitcoin is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Crypto Rating shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about cryptocurrencies. The entire responsibility for the contents rests with the authors. Reprint of the materials is available only with the permission of the editorial staff.