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Bitcoin prices haven’t been this low since January.
dream time
Bitcoin
Prices approached year lows on Friday as cryptocurrencies suffered from a stock market selloff that extended to digital assets. There is a chance of more volatility next day.
Bitcoin price is down 8% in the past 24 hours to below $36,200, after hitting its biggest one-day drop since January on Thursday. The largest digital asset has traded around $40,000 for most of this year, staying off an all-time high of $68,990 reached in November 2021. Bitcoin dropped below $35,900 on Friday, approaching year lows 2022 near $35,000.
“Negative developments over the weekend could prompt a sell-off to around $32,000, which is a bad start on Monday,” said Jeffrey Haley, an analyst at broker Oanda. “If risk sentiment continues to decline, chicken bones on the technical charts suggest that bitcoin could be on its way to $28,000 and then $20,000.”
ether,
The second largest cryptocurrency, recorded similar declines. The token that supports the Ethereum blockchain network lost 7% to trade around $2.70 – its lowest level since mid-March.
Smaller cryptocurrencies, or “altcoins,” were also deep in the red.
Solana
decreased by 10%,
Cardano
It fell 9%, and the crash decreased by 13%. “Memecoins” — so called because they were initially intended to prank the internet rather than important blockchain projects — also fell out, with
Dogecoin
And
Shiba Inu
About 6% less.
The drop in the price of digital assets follows a sell-off in the stock market.
While bitcoin and other cryptocurrencies should, in theory, trade independently of mainstream financial markets, they have been shown to be linked to other risk-sensitive assets such as stocks, especially technology stocks, over the past few months.
The tags have worked in the past few days. Wednesday ,
Standard & Poor’s 500
And
daw
Both are up more than 2% in a stunning rally as indices post their best one-day gains since 2020. Cryptocurrencies performed well on that day as well. Everything collapsed on Thursday when tech stocks and digital assets were among the worst losses; heavy technology
Nasdaq
It’s down 5%, its worst day in two years.
Investors face a dynamic and challenging monetary policy environment. The Federal Reserve is expected to raise interest rates several times this year as the central bank battles historically high inflation, but this significantly risks weakening economic demand, causing a recession.
Against this backdrop, “risk assets” such as tech stocks and cryptocurrencies have performed particularly poorly, hurt in part by persistently high bond yields. The 10-year US Treasury yield reached 3.1% on Friday, close to four-year highs. When yields are high, the math is difficult for higher-risk assets: Higher yields reduce the additional return compared to the bonds that traders expect to get from riskier bets.
Stocks fell on Friday as a volatile week drew to a close. But for cryptocurrencies, which are traded 24 hours a day, seven days a week, there will be no respite that comes on Saturday and Sunday. Market participants will be watching the digital asset space as stock markets take a breather over the weekend.
“If one wants to watch the trend of travel for market sentiment, it might be interesting to watch the crypto space this weekend, especially if we get some major bombshells,” Halley said.
More immediately, the US jobs report for April is in focus.
Investors will be watching this labor market indicator for more signs of inflation. 400,000 jobs are expected to be added last month. But if the real number is much higher than that, and wages are also up, that could signal that inflation may drag on, forcing the Fed to act more aggressively and potentially triggering another negative market reaction.
Write to Jack Denton at jack.denton@dowjones.com