Bitcoin fell 5.2 percent in the last 24 hours to $32,940 at 7 a.m. ET, continuing its precipitous decline following a terrible weekend. Bitcoin’s market price has dropped for the fifth day in a row, to less than half of what it was at its all-time high of $69,000 in November.
The decline isn’t limited to Bitcoin. Ethereum, the second-largest cryptocurrency, dropped 5% to $2,440 since the weekend began.
Bitcoin has fallen out of the $35,000 to $46,000 band it has fluctuated between in the first few months of 2022 since breaking below its three-month rising trend line on Friday. Analysts now believe the price drop might signal the start of a new market trend, as Bitcoin’s value reaches its lowest point since July 2021.
According to Edul Patel, CEO of Mudrex, an algorithm-based cryptocurrency investing platform, “The negative trend is expected to continue for the next several days,” he said, adding that Bitcoin might hit the $30,000 mark.
Lows in July 2021
Prices of Bitcoin and other cryptocurrencies have increasingly begun to move in lockstep with the market as institutional and professional investors have gotten past cryptocurrency’s volatile character.
According to Bloomberg statistics, Bitcoin’s 40-day correlation with the S&P 500 benchmark is at an all-time high of 0.82, so any shock that causes investors to flee to safer assets hits riskier tech stocks and cryptocurrencies harder than other assets.
Stock futures sank and government bond yields jumped after the Federal Reserve announced it will raise interest rates by half a percentage point on Thursday, the highest hike since 2000, to combat inflation. On Monday, European and Asian equities both fell. By late morning, the Stoxx 600 index had lost 1.5 percent, while Japan’s Nikkei index had lost about 2.5 percent. On Friday, the Nasdaq composite, a tech-heavy index, fell below 1.4 percent, extending its year-to-date loss to 23.3 percent.
The recent drop in bitcoin’s price has totally reversed the bull run that saw it hit $69,000 in November 2021.
“I find it impossible for Bitcoin to develop a larger rally until the market begins seeing past the impact that [quantitative tightening] and hiking rates would have,” Lucas Outumuro, head of research at IntoTheBlock, told Fortune last week.
“In light of mounting inflation worries, most investors have chosen a risk-off approach—selling equities and cryptos alike to minimise risk,” Darshan Bathija, CEO of Singapore-based crypto exchange Vauld, told Bloomberg.