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BTC$70 351.33

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Tether
USDT$0.999988

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The price of bitcoin slid last week after a wider stock sell-off in the US


18 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 Falls Below $34,000 In Weekend Market Madness

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.

Bitcoin's Price Plunges Below $34000

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.


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Top Cryptocurrencies with Price Predictions

# Crypto Prediction Accuracy CVIX Price 24h 7d Market Cap 7d price change
1 Bitcoin (BTC) BTC Bitcoin predictions 78.8% 42 $70 351.33 0.98% 6.24% $1 383 616 289 179 BTC 7 days price change
2 Ethereum (ETH) ETH Ethereum predictions 71.6% 50 $3 563.43 1.41% 1.23% $427 863 792 327 ETH 7 days price change
3 Tether (USDT) USDT Tether predictions 91.2% 1 $0.999988 0.03% -0.01% $104 503 049 622 USDT 7 days price change
4 Binance Coin (BNB) BNB Binance Coin predictions 62.4% 81 $609.39 3.66% 5.26% $91 126 608 949 BNB 7 days price change
5 Solana (SOL) SOL Solana predictions 56% 88 $187.39 2.04% 4.26% $83 277 925 728 SOL 7 days price change
6 XRP (XRP) XRP XRP predictions 80% 28 $0.620328 1.40% -2.67% $34 046 224 673 XRP 7 days price change
7 USD Coin (USDC) USDC USD Coin predictions 92.8% 2 $0.999962 -0.02% -0.02% $32 473 090 820 USDC 7 days price change
8 Dogecoin (DOGE) DOGE Dogecoin predictions 68.8% 66 $0.213486 8.10% 36.16% $30 669 747 448 DOGE 7 days price change
9 Cardano (ADA) ADA Cardano predictions 65.6% 66 $0.647302 0.63% 1.81% $23 033 195 143 ADA 7 days price change
10 Avalanche (AVAX) AVAX Avalanche predictions 59.2% 87 $53.96 -0.08% -3.86% $20 364 103 953 AVAX 7 days price change
11 SHIBA INU (SHIB) SHIB SHIBA INU predictions 58% 94 $0.000031 1.91% 12.79% $18 233 772 220 SHIB 7 days price change
12 Toncoin (TON) TON Toncoin predictions 60.4% 87 $4.88 1.12% 13.91% $16 940 788 238 TON 7 days price change
13 Polkadot (DOT) DOT Polkadot predictions 77.2% 49 $9.41 -0.61% 1.32% $13 426 123 378 DOT 7 days price change
14 Bitcoin Cash (BCH) BCH Bitcoin Cash predictions 71.2% 60 $572.73 7.39% 37.54% $11 272 605 158 BCH 7 days price change
15 Chainlink (LINK) LINK Chainlink predictions 76% 42 $18.97 -1.66% 2.82% $11 139 217 136 LINK 7 days price change

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