Cryptocurrency prices were sliding Monday, moving in the same direction as the major stock indexes.
Bitcoin was down 6.4% to $40,416 at last check, according to CoinGecko, while ethereum was dropped 8.2% to $3,024 and dogecoin sank 9.5% to $0.140789.
‘The Elephant in the Room’
Crypto’s fall matched the downward movement of the stock market, with the Dow Jones Industrial Average losing nearly 180 points.
The tech-heavy Nasdaq 100 has traded in synch with bitcoin recently and Arthur Hayes, co-founder of cryptocurrency exchange BitMex, noted in a recent blogpost that “if the NDX [Nasdaq 100] tanks, it will take crypto down with it.”
Winston Ma, managing partner of CloudTree Ventures, Author of The Digital War – How China’s Tech Power Shapes the Future of AI, Blockchain and Cyberspace,” said “cryptos’ performance lately, exemplified by bitcoin and ether, has largely dovetailed with major equity markets, which have fallen amid Fed monetary tightening and global geopolitical uncertainty.”
“Bitcoin have correlated tightly to the S&P 500 index and ether to NASDAQ,” Ma said. “Meanwhile, the looming US regulation is the third factor – the elephant in the room.”
He added that the Securities and Exchange Commission and the U.S. Treasury Department are accelerating crypto law marking after President Joseph Biden signed executive order regarding cryptocurrency in March.
“Last year China was the big elephant in the room making big moves on crypto regulation; this year, it’s actually going to be the U.S.,” Ma said.
Edward Moya, senior market analyst for the Americas with Oanda, said “bitcoin is under pressure as bond market selloff resumed, prompting a widespread selling of risky assets.”
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‘Bitcoin is Struggling’
“The Bitcoin 2022 conference was more of a party than a game-changing event that will spur the next round of massive investment into cryptos,” Moya said.
The four-day Bitcoin Conference was held in Miami from April 6-April 9.
“Bitcoin is struggling here as rising rates are leading to a de-risking moment for many traders,” Moya said. “With no momentum from the Bitcoin 2022 conference, the focus shifts to inflation and expectations are for a very hot report that will probably be the peak.”
The Bureau of Labor Statistics is scheduled to issue the Consumer Price Index for March on Tuesday, April 12.
Moya added that nothing has changed for Bitcoin’s fundamentals in the past week, but momentum selling could make things interesting if the $40,000 level breaks.
“Bitcoin should see strong support ahead of the $38,000 level,” he said.
David Lesperance, managing partner of immigration and tax adviser at Lesperance & Associates, said the Algorithmic Stablecoin Neutrino, that is linked with the Waves blockchain, lost its peg to the dollar after the price of the underlying token tumbled.
Lesperance said stablecoins facilitate trading by minimizing the volatile price swings seen by most cryptocurrencies.
Most hold assets such as dollars in reserve to maintain the one-to-one relationship, he said, while others such as Neutrino seek to keep at equilibrium by issuing and burning tokens.
“If the value of the underlying token drops sharply, the peg can drop below the target level,” he said. “This episode simply adds to regulatory interest which was already triggered by the issues surrounding other stablecoins such as tether.”
Read More:Crypto Price Check: Bitcoin Moves in Downward Step With Stock Market
2022-04-11 19:03:44
