At the start of Monday, Bitcoin's price temporarily fell below $42K, losing more than 3.5% from Sunday's peak value. This is clear evidence of a tug-of-war between bullish retail traders and professional bidders who sold risky assets in response to pressure on stock prices.
Altcoins went down
By the start of the day on Monday, the crypto-currency fear and greed index had lost 2 points to 32, settling in the fear territory.
According to CoinMarketCap, the total capitalization of the crypto market decreased by 2% to 1.95B in a day. This clearly reflects the increased pressure on weaker altcoins due to the curtailment of risk demand. The share of bitcoin in the capitalization of the entire crypto market is now 41.3% (+0.6 points in 7 days and +0.3 in a day).
In total, BTC has been losing 1% over the past 24 hours and 8.5% over the week. Ethereum is down 2% and 9% in the last 7 days, and top altcoins fell in price by 1.3% (Dogecoin) and up to 7.4% (Terra).
Why cryptos are correlating with Nasdaq
The crypto market is again increasing its correlation with the dynamics of stocks, or rather, it is guided by the high-tech Nasdaq index. This relationship is easily explained by the fact that in both cases, investors are betting on a progressive idea and not on a stable income.
The original plan, in which cryptocurrencies would become an alternative haven for capital outside of the traditional banking system, has not been tested by the military events in Ukraine. As it turns out, crypto exchanges value the idea of legally earning commissions on transactions and on the placement of tokens much more than the original off-system and apolitical approach.
Thus, the cryptocurrency market is increasingly becoming a platform for the assets of ever smaller projects in the technology sector. There is nothing wrong with this in the long run, but right now, such a direct correlation with stocks can do a disservice. Against the backdrop of tightening monetary policy, stocks are under increased pressure.
Amid deteriorating sentiment, bitcoin dropped to a 50-day moving average near $42K. Fixing below this level may open a direct path to the area of March lows near $38K.
