Today’s bitcoin price dropped 15% within 24 hours, to below $40,000 for its first time since March 15. Ethereum dropped 14% and fell below the $3,000 mark, for the first time since March 23.
According to CoinMarketCap, it’s part of an even larger trend with crypto markets plummeting 8.5% within 24 hours to reach a market cap in excess of $1.84 trillion.
The equities markets are a good place to start looking for possible answers. S&P 500, which is an index of 500 of the most publicly traded companies in America, ended down 1.7%. The Dow Jones Industrial Average ended Monday 1.2% higher, while the Nasdaq, which is tech-heavy, lost 2.2%.
Bitcoin is becoming increasingly closely correlated with stock markets. This is a change from the historical correlation between Bitcoin and other cryptocurrency prices. BTC’s price correlation to the S&P 500 reached 0.49 in March. -1 means they move in opposite directions, and 1 means they move in perfect harmony. This was the highest rate since Oct 2020, according to Arcane Research.
What’s the deal with stock prices?
You can choose your choice. You have the ongoing Russian war on Ukraine, new COVID lockdowns for China and the Federal Reserve’s aggressive decision to raise interest rates and stop money flowing into the economy.
Already, the Nasdaq had dropped nearly 4% between Monday and Friday last week. Things haven’t been much better over the weekend. According to Arthur Hayes, founder of BitMEX, crypto market caps could collapse as less money is being pumped into the economy by the Fed to combat inflation. On Sunday, the billionaire crypto entrepreneur and investment banker Arthur Hayes predicted that Bitcoin and Ether would continue to fall.
stated that Ether and Bitcoin will bottom before the Fed acts and Uturns its policy of tightening to loose. He said they would test the $30,000- and $2,500 thresholds by June’s end.
Hayes had predicted that Bitcoin would reach $10,000 in 2019, when it was less than $5,000. Hayes’ prediction was correct, as BTC rose to over $12,000. He had predicted that Bitcoin would hit $50,000 in a year, and that it would top out between $3,000 to $5,000. Although he was wrong about the former, he was right about the latter.
The Bitcoin bulls hope Hayes’ latest prediction is wrong. However, a glance at today’s price movements suggests that Hayes could be right.
