Bitcoin hit its lowest point since July of last year on Monday, following a rout over the weekend that saw investors take $ 305 billion out of cryptocurrencies and other digital assets.
The crypto was trading around $ 32,200 per coin Monday, down from $ 39,500 on Thursday following a brief “relief rally” after the Federal Reserve’s policy-making meeting.
Over the weekend, bitcoin and other cryptocurrencies surpassed their year-to-date lows amid a wider sell-off of riskier assets. Between Sunday and Monday morning, the market capitalization of all crypto assets had sold off 5%% and currently holds $ 1.49 trillion.
“Our clients have been trimming their positions since last week. Many are still seeking some price stability before re-entering the market,” Shawn Eggers, global head of execution services with cryptocurrency prime brokerage SFOX, told Yahoo Finance, noting that many of his clients took “their chips off the table” in “large block-sell orders.”
“The global and geopolitical substrates look quite poor and we are anticipating a turbulent May and June,” Egger added.
Bitcoin is down 16.3% in the last week and 6.3% lower in the past 24 hours, according to Coinmarketcap, while investors still haven’t found its bottom as it trades steadily down in the last six days.
The second largest cryptocurrency, ether (ETH), has faced virtually the same losses over the past week, down 16%. It’s changing hands at $ 2,375, down from $ 2,931 per coin since Thursday.
During a cycle of tightening monetary policy, it’s not abundantly clear how cryptocurrencies will hold up relative to other assets, but as long as they continue to trade like risk-on assets, their performance appears to mirror a more exaggerated version of the stock market’s sell -off.
Since central banks globally lowered interest rates to shore up people and businesses during the pandemic, more institutions have begun trading cryptocurrencies. The trends contribute to why bitcoin has maintained an increasing correlation with risk-on equities, particularly technology stocks.
Though its correlation to the Nasdaq-100 ebbs and flows, last month one analyst noted that if its high correlation to technology stocks is sustained, bitcoin would be dragged down during a cycle of monetary tightening.
According to crypto analysis firm Kaiko, bitcoin’s 30-day correlation to the Nasdaq is at all-time highs, on pace to match its lockstep movement with ether.
Ylann Guez, a senior trader with crypto trading firm, Efficient Frontier, told Yahoo Finance that he doesn’t believe bitcoin has found its bottom yet. After dropping below $ 34,000, bitcoin’s next base for strong buyer support appears to be $ 30,000, according to Guez , who said its true bottom could be $ 20,000.
Once BTC drops below the $ 30,000 psychological point, the movement should trigger a “capitulation trade,” Guez said.
If not, “next stop, $ 28,000 and $ 18,000 subsequently, unfortunately,” SFOX’s Egger added.
David Hollerith covers cryptocurrency for Yahoo Finance. Follow him @dshollers..
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