Bitcoin drops most in a month as markets turn risk-averse
BITCOIN fell for a fourth day as expectations for the biggest rise in US interest rates in three decades diminishes demand for riskier assets.
The correlation coefficient between the Bitcoin and US equities have climbed in the past 90 days as investors grow more risk adverse with the Federal Reserve pulling back on the pandemic era stimulus that is credited for helping to fuel the rise of crypto. Alternative coins such as Ether, XRP and Litecoin fell more than the original digital asset.
Bitcoin fell as low as $42,760 in early Asia trading, dropping below $43,000 for the first time since March 24. It is down about 7.4% this year. The declines in digital assets mirrored a broad equities selloff, with Japan’s Nikkei Index down 1.8%.
Correlation between Bitcoin and stocks remains positive.
Altcoins have dipped further given their smaller market value and lower trading volume, which usually results in wider price swings. Cardano has fallen 9.1% over the past five days, while Solana is down 9.4%.
Bitcoin briefly surpassed $48,000 in late March to erase losses since yearend, spurring optimism that it would break out of the tight trading range in which it had been mired. Ether had been outperforming Bitcoin during the rebound due to its upcoming technical upgrade scheduled later this year.
Earlier, Billionaire crypto investor Michael Novogratz says that once the Fed takes a pause, Bitcoin could start to take off again. Mr. Novogratz, who leads Galaxy Digital Holdings, predicted the central bank will remain “very hawkish for a while” due to high inflation, and will likely raise interest rates by 50 basis points soon. But as the economy slows down and the Fed steps back, “Bitcoin goes to the moon,” he said, repeating a popular crypto catchphrase.
Mr. Novogratz was speaking at the “Bitcoin 2022” conference in Miami, which kicked off on Wednesday with the unveiling of a bull statue that commemorates the city’s partiality toward cryptocurrencies and the digital-assets industry. The event has attracted more than 25,000 attendees.