Cryptocurrencies are moving in tandem with stocks, which continue to fall since the beginning of the year and just had their worst week since March 2020.
Investors are dumping risk assets such as technology stocks in anticipation of the Federal Reserve’s strict monetary policies. They’re also considering the impact of more regulation on the crypto market, as Russia’s central bank plans to prohibit mining and use of cryptocurrencies.
Bitcoin falls in tandem with the Dow Jones Industrial Average
According to Coin Metrics, Bitcoin fell to $32,982.11 on Monday, its lowest level since July, but climbed 5.6 per cent in afternoon trading to $37,183.25. Meanwhile, the Dow dropped as much as 1,115 points, and the S&P 500 briefly into correction territory.
According to Coin Metrics, the price of ether has dropped to $2,176.41, its lowest level since July. The price then increased by 1.1 per cent to $2,444.85. Both bitcoin and ether have fallen over 50% from their all-time highs.
“It’s possible that macroeconomic concerns, such as the Fed’s response to inflation rates, have facilitated more de-risking activity in general,” said the head of OTC options trading at Kraken, Juthica Chou. “The recent price drop, coupled with high volatility, could be leading to further selling as participants look to reduce risk.”
Bitcoin, a subject of discussion among cryptocurrency analysts
Some analysts believe $30,000 is the next level of support for bitcoin to test, but 22V Research analyst John Roque believes bitcoin could fall even further. Roque stated that he has set a target of $30,000, but also mentioned that the median historical bear market for bitcoin has seen a decrease of 78 per cent.
“A 78 per cent drop from the bitcoin high of roughly $69,000 suggests a probable downside figure of around $15,000,” Roque stated. “It’s safe to assume that no bitcoin bull uses that figure in their forecast. To be sure, neither do we, but we think it’s worth keeping in our back pocket just in case.”
