Bitcoin continues to decline and there is no sign of stopping. where the bottom may be.

Cryptocurrency prices fell over the weekend and into Monday, with


Bitcoin

Investors approached an annual low as investors continued to dump risky assets amid a challenging stock market and challenging macroeconomic background.

Bitcoin price has fallen 4% in the past 24 hours to below $33,300, exacerbating losses over the weekend after trading around $36,000 on Friday. It is putting the largest cryptocurrency at its lowest level since January, and a move well below $33,000 would mark a new annual low and the lowest since July 2021.

The recent sale slashed Bitcoin’s value to less than half of its all-time high of $68,990 reached in November 2021, a big step away from the relatively tight range near $40,000 that Bitcoin has been trading around for months.

“Bitcoin followed the stock market lead, extending lower after a weak April,” said Katie Stockton, managing partner at technical research group Fairlead Strategies.

“The short-term momentum has deteriorated,” Stockton said. “Bitcoin is no longer oversold from a short-term perspective. This creates additional risks.”

ether,
The second largest cryptocurrency, down 5% to $2,400, fell over the weekend after trading around $2,700 on Friday. Hands are now changed around the lowest levels since mid-March.

Smaller cryptocurrencies, or “altcoins,” were flat, dropping on Monday to further losses since Friday.


Solana

fell 7% and


Cardano

9% was in red.


Luna

The token, which plays a key role in keeping TerraUSD stable against the US dollar, is down 25% since Friday after selling pressure unpegged Terra over the weekend.

‘Memecoins’ – so called because they were initially intended to be online pranks rather than important blockchain projects – also fell out.


Dogecoin

lose 5% and


Shiba Inu

11% less.

Bitcoin and other digital assets should, in theory, be traded independently of the mainstream financial markets. But the recent selloff in cryptocurrencies largely matches the actions in the stock market, and Bitcoin has largely shown to be linked to other risk-sensitive assets such as stocks, especially technology stocks.

heavy technology


Nasdaq Composite

The index has lost more than 23% this year, putting it in bear market territory, while the broader S&P 500 is down 14%. The


Standard & Poor’s 500

It posted its fifth straight week of losses last Friday, its worst performance since 2011, and stocks fell again on Monday.

Investors face a dynamic and challenging monetary policy environment. The Fed has already moved aggressively to raise interest rates this year, and is expected to continue only while the central bank battles historically high inflation. This risks significantly undermining economic demand, causing a recession.

Ongoing severe Covid-19 lockdowns in China, which threaten to disrupt global supply chains, limit companies’ access to materials and only fuel inflation, are only making matters more complicated.

Against this backdrop, “risk assets” such as tech stocks and cryptocurrencies are performing particularly poorly as investor sentiment deteriorates, which has been hurt in part by the continued high bond yields.

The yield on the benchmark 10-year US Treasury approached 3.2% on Monday, putting it on track to close at the highest levels since late 2018. When yields are high, the math is difficult for riskier assets: Higher yields reduce the relative additional yield of bonds that Traders expect to get it with the riskiest bets.

So where will you find cryptocurrencies at the bottom? Volatility is expected to continue in the near term, and a turnaround may not come anytime soon.

“Bitcoin may be on track to resume a sharp downtrend,” said Yuya Hasegawa, an analyst at crypto exchange Bitbank, who sees the largest crypto trading in the $30,000-$38,000 range this week.

Looming heavily in the coming days is inflation data for April. The US Consumer Price Index (CPI) is due out on Wednesday, and investors are likely to hold onto that number as the market continues to revise its estimates of how aggressive the Fed’s policy will be.

If the CPI grew more than 8.1% year-on-year last month, which is close to what markets are expecting, investors can take that as a sign that the Fed will move more aggressively — and that could keep selling.

“While it will not be enough to completely reverse market sentiment, lower CPI readings will be enough to support the bitcoin price temporarily,” Hasegawa said. “Until then, the price must maintain the psychological level of $33,000, which is also near the 2022 low, to prevent technical sentiment from escalating further.”

Another negative sign for the crypto market is that institutional money may be driving price pressure, according to Marcus Sotirio, an analyst at digital asset broker GlobalBlock. Sotiriou said that before the recent drop, the price of Bitcoin was listed on the exchange


Coinbase Global

(Stock ticker: COIN) It ​​was at a discount compared to the Binance exchange.

“This is evident because a higher percentage of institutions use Coinbase than retail, while the opposite is the case for Binance,” Sotrio said. “The mentioned price mismatch indicates that institutions are not as interested at the moment as retail.”

Write to Jack Denton at jack.denton@dowjones.com

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