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Bitcoin (BTC) suffered steep losses over the past week, bringing the token to its lowest levels this year.
The world’s largest cryptocurrency is now trading around $33,000- its lowest level since July 2021. The token has slumped nearly 14% in the past week, and is down over 50% from a record high hit in November.
A bulk of BTC’s losses happened in tandem with U.S. stock markets, particularly the Nasdaq index. It is this correlation that shows that BTC is likely set for more sharp losses in the coming days.
U.S. stock futures indicate heavy losses
U.S. stock futures, which indicate how Wall Street is expected to perform, are currently down between 1.2% and 2%, according to data from CNBC. Nasdaq futures in particular are performing the worst.
BTC has largely tracked the Nasdaq this year, and is so far showing no signs of decoupling. With the Nasdaq set to notch heavy losses on Monday, it seems likely that BTC will follow suit.
BTC’s correlation to equities also appears to have strengthened in 2022. During its selloff last week, the token marked its biggest intraday losses just around the Wall Street open (9:30 AM EST). This trend has also seen investors treat the token more like a high-risk asset, as opposed to a digital safe haven.
The Nasdaq Composite index is down about 23% this year. BTC has fallen slightly more, at around 27%. Both losses are driven by two main factors- fears of rising inflation, and the expectation that the Federal Reserve will sharply hike interest rates.
How low will BTC go?
With the Nasdaq positioned for a near 2% loss, BTC could also fall in a similar magnitude. The token could likely finish Monday at around $32,000 to $30,000.
While some analysts note that the token is in a price range that heralded major reversal in 2021, BTC has few catalysts to spark a recovery. Veteran investor Peter Brandt recently said he expects the token to go as low as $28,000.
BTC’s losses have caused similar drops across most of the crypto market. Traders now appear to be moving out of risky assets, and into safer plays such as stablecoins, or even select equities.
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