Bitcoin price has crashed again today. In fact, the price fell below $40,000 for the first time since March 15. Ethereum also fell below the psychological $3,000 level and lost 14% of its value.
Crypto Market Loses $300 Billion in Value in Week
Today’s price drop is part of a market-wide price drop. The crypto market has lost more than $300 billion of its value in a week. That is a price drop of more than 15%.
Not only the crypto market, but also the stock market has been underperforming in recent days. For example, the S&P 500 has lost more than 4% of its value in the past week and the AEX has also lost more than 3.5% of its value.
As we have described many times before, Bitcoin is quite strongly correlated with global stock prices. In March, the price correlation between BTC and the S&P500 even reached a high of +0.49. (-1 would mean they move oppositely and +1 means they move perfectly together.) According to Arcane Research the correlation is currently at its highest point since October 2020.
What’s going on with the global financial markets?
There are a number of major issues that have been making the global financial markets struggling lately. There is, of course, the ongoing war between Russia and Ukraine. In addition, part of China is back in lockdown due to Covid last week. And the decision by the US Federal Reserve to raise interest rates is not helping at all.
Now that less money is being pumped into the economy, as central banks try to fight inflation, we often see that the crypto market takes the hardest hit. BitMEX founder Arthur Hayes wrote: “A crypto carnage is coming.”
He said he expects the Bitcoin price to fall to a low of $30,000 in June. According to him, the Ethereum price could also crash below USD 2,500. BTC investors naturally hope Hayes’ prediction is wrong. But a look at last week’s price movement offers little hope for a happy ending.