The crypto markets melted as BTC dropped by 1.5% and ETH lost 14% of its value and settled near $3000 so let’s have a closer look at today’s latest cryptocurrency news.
BTC dropped 15% in the past day and dropped below $40,000 for the first time since the middle of March. In the meantime, ETH dipped by 14% and floated below the $3000 mark for the first time since March 23. This is only a part of a larger trend with the markets tumbling 8.5% in the time span of 24 hours to hit a market cap of $1.84 trillion. If you are looking for a plausible answer to why this happened, it is worth checking the equity market. The S&P50 closed down 1.75 and Dow Jones 1.2%. Bitcoin which is correlated to other crypto prices is now correlated with the stock prices, and the BTC price correlation with the S&P500 hit 0.49 which made it the highest rate since October 2020 as crypto markets melted.
There are multiple reasons for the current situation on the market. For one, the ongoing war in Ukraine, the new lockdown wave in China, and also the FED’s decision to raise interest rates and choke off the supply of money in the economy. The NASDAQ was down by 4% from Monday to Friday and the weekend hasn’t made things much better either. With some less money pumping into the economy as the FED looks to battle inflation, the crypto market cap could deflate. The former BitMEX CEO Arthur Hayes, said that both BTC and ETH had a lot more to fall to, he added:
“Bitcoin and Ether will bottom well before the Fed acts and U-turns its policy from tight to loose.”
He predicted they will test the $30,000 and the $2500 thresholds before June ends. Hayes also predicted that when the BTC price was below $5000, it will hit $10,000 which turn out to be correct as the price rallied to above $12,000. A year earlier, he suggested that BTC can hit $50,000 the same year and bottom out between $3000 and $5000 but he was way off from this prediction. The BTC bulls are hoping that Hayes’ recent prediction is wrong but the price movements today indicate that he could be on to something.