The stock market is pulling the crypto market down
The crypto market crash was sparked by a painful day on Wall Street. The Dow Jones lost more than 1,000 points yesterday (-3.2%), marking the biggest one-day drop since 2020. The tech exchange, Nasdaq, even fell by almost 5%. And, since Bitcoin is correlated to the stock markets, the crypto market has also suffered a significant loss.
“The Dow yesterday saw its worst decline since 2020, and all related risk assets followed suit, including crypto.”
On Wednesday, the US central bank raised interest rates by half a percentage point. Initially, the financial markets reacted positively. However, that positive mood quickly changed. Further rate hikes and monetary policy tightening have raised fears that the US economy could slip into recession.
Vijay Ayyar, vice president of Luno told the CNBC that the recent decline has caused Bitcoin to lose significant levels as it fell below USD 37,500. This could indicate that the price will fall much further in the coming days, he says.
According to Ayyar, Bitcoin could soon test a low of $30,000. If the price falls below that, the price could even fall as low as $25,000.