Bitcoin prices keep falling with no signs of stopping

The latest sell-off brings Bitcoin to less than half the value of its all-time high of $68,990 reached in November 2021, and is a significant departure from the relatively tight range near $40,000 that Bitcoin has been trading in for months.

“Bitcoin has followed the lead of the stock market, extending lower after a weak April,” said Katie Stockton, managing partner at technical research group Fairlead Strategies.

“Short-term momentum has deteriorated,” Stockton said. “Bitcoin is no longer oversold from a short-term perspective. This creates additional risk.”

Ether,
the second-largest crypto, was down 5% at $2,400, declining over the weekend after trading around $2,700 on Friday. It is now changing hands around the lowest levels since mid-March.

Smaller cryptocurrencies, or “altcoins,” were not spared, slipping to further losses on Monday since Friday.

Solarium
fell 7% and

Cardano
I was 9% in the red.

Moon,
the token that plays an integral role in keeping the TerraUSD stablecoin pegged to the US dollar, is down 25% since Friday after selling pressure caused Terra to de-peg over the weekend.

“Memecoins,” so called because they were initially intended as internet jokes rather than meaningful blockchain projects, also fell, with

doecoin
losing 5% and

Shiba Inu
11% lower.

Bitcoin and other digital assets should, in theory, be traded independently of major financial markets. But the recent cryptocurrency sell-off largely coincides with the action in the stock market, and Bitcoin has largely shown that it is correlated with other risk-sensitive assets such as stocks, and especially tech stocks.

heavy technology

Nasdaq Composite
The index has lost more than 23% this year, putting it in bear market territory, while the broader S&P 500 is down 14%. The

S&P 500
posted its fifth straight week of losses last Friday, the worst streak since 2011, and shares fell again on Monday.

Investors face a challenging and dynamic monetary policy environment. The Federal Reserve has already moved aggressively to raise interest rates this year, and that is only expected to continue as the central bank battles historically high inflation. This risks significantly denting economic demand, causing a recession.

The continuation of severe Covid-19 lockdowns in China, which threaten to compromise global supply chains, limiting companies’ access to materials and only further stoking inflation, only complicates matters.

Against this backdrop, “risk assets” such as tech stocks and cryptocurrencies are doing particularly poorly as investor confidence deteriorates, in part because bond yields continue to rise.

The yield on the benchmark 10-year US Treasury bond approached 3.2% on Monday, putting it on track to close at the highest levels since late 2018. When yields rise, Math is hard for riskier assets: Higher returns reduce the extra return to bonuses that traders expect to get from making riskier bets.

So where will cryptocurrencies find bottom? In the short term, volatility is expected to continue, and there may be no change in the short term.

“Bitcoin may be on track to restart a steep downtrend,” said Yuya Hasegawa, an analyst at crypto exchange Bitbank, who sees the largest crypto trade in a range of $30,000 to $38,000 this week.

Inflation data for April is largely forthcoming in the coming days. The US consumer price index (CPI) is due on Wednesday, and investors are likely to cling to the figure as the market continues to revise its estimates on how aggressive the Fed’s policy will be.

If the CPI grew more than 8.1% year-over-year last month, which is what markets are expecting, investors could take this as a sign that the Fed will act more aggressively, and this could lead to continued selling. .

“Although it will not be enough to completely reverse market sentiment, lower CPI readings will be enough to support Bitcoin price temporarily,” Hasegawa said. “Until then, the price has to hold the psychological level of $33,000, which is also around the 2022 low, to prevent the technical sentiment from worsening further.”

Another negative sign for the crypto market is that institutional money may be leading the price pressure, according to Marcus Sotiriou, an analyst at digital asset broker GlobalBlock. Sotiriou said that, prior to the recent drop, the exchange-traded price of Bitcoin

world coinbase

(ticker: COIN) was at a discount compared to the Binance exchange.

“This is telling as a higher percentage of institutions use Coinbase compared to retail, while Binance is the opposite,” Sotiriou said. “The aforementioned price mismatch suggests that institutions are currently not as interested as retail.”

Email Jack Denton at [email protected]