Bitcoin (BTC) fell below $30,000 on Tuesday as both traditional financial markets and cryptocurrencies suffer from a sell-off caused by the Federal Reserve's aggressive monetary tightening and recession fears.
The recent decline sent bitcoin to a 10-month low and its lowest price this year. The last time the largest cryptocurrency by market cap fell below the $30,000 threshold was on July 20, when it hit $29,301 before recovering.
- Edward Moya, senior market analyst at Oanda, said, "The recent slide in cryptocurrencies is entirely due to the sell-off triggered by tech stocks and not cryptocurrency fundamentals. Bearish momentum could drive Bitcoin toward the $28,500 level, but that could be where some long-term bets come into play. The long-term fundamentals for Bitcoin remain in place, but a return to record highs will take a long time. Bitcoin will stabilize once the carnage on Wall Street is over, and right now many investors are still in panic selling mode."
- Steven McClurg, chief investment officer and co-founder of Valkyrie, told CoinDesk TV on Monday, "If the Fed continues to raise rates in June and July, the markets will likely continue to fall throughout the summer. However, I expect the Fed to pause or even cut rates starting in the September meeting due to the midterm elections coming up in November, and that will be the catalyst then. At that point, the market could go back up.
- Jeff Dorman, chief investment officer at Arca, wrote in a report, "This is just a buyer's strike of ultimate proportions, and it remains to be seen what (if anything) will bring buyers back."
This month, the Federal Reserve raised its benchmark interest rate by 50 basis points (0.5 percentage points) and will likely do so again at its next meeting in June.
Bitcoin's price drop is part of a broader market selloff. All three major stock market indexes are down, with the S&P 500 currently trading down 3.2% at 3991. The technology-heavy Nasdaq and Dow Jones Industrial Average are also trading lower at 11,623 and -4.5%, respectively, and 32,245 and -2%.
During this market sell-off, the correlation coefficient between Bitcoin and Nasdaq reached an all-time high of 0.8, according to data firm Kaiko. This is considered a strong positive correlation.