Bitcoin, the largest cryptocurrency by market cap, has continued to correlate with other high-risk assets. The big bull took a sharp nose dive on the 5th of May, and up until press time, Bitcoin (BTC) is still trading downwards.
Over $400 Million Liquidations in Last 24 hrs
At the time of this writing, Bitcoin trades at $36,421, as its 24 hour-loss jumps above 8%. This has brought the 7-days consecutive drop to 7.85%. Similarly, Ethereum (ETH) has imitated Bitcoin’s downward move, and has dipped significantly from its previous levels. With over 6% losses from the past 24-hours, Ether, which was very close to tapping $3,000 the day before, is now sitting at $2,738.
Overall, the market has sustained over $406 million in liquidations, over the last 24-hours, according to data from Coinglass. But the genesis of this drop, which began with Bitcoin dropping 5% on the 5th of May, after nearly clenching $40,000, seems to be tied to the stock market.
S&P 500 – Bitcoin Correlation
It appears that Bitcoin didn’t dip, until the stock market selloff kicked in on Thursday. Nasdaq saw a 5% decline and the cryptocurrency market immediately followed suit. In the same manner, Bitcoin and other cryptocurrencies surged on Wednesday and also recorded a bullish spike, but this was not independent of the stock market. The S&P 500 recorded a notable performance for the first time in two years, when it rose 3% on that day, and the cryptocurrency market benefitted from this rise.
The correlation that the cryptocurrency market has with the stock market had been noticed by market players in the past. However, this year, particularly within the last two months, the market has recorded a major upsurge in Bitcoin’s correlation with the stock market. On the 22nd of April, Bitcoin dipped 5% for the same reasons.
Prior to this, data from Arcane Research revealed that Bitcoin’s correlation to the S&P 500 hit the highest level, for the first time since October 2020, when it hit 0.49.
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