32.7 C
Bangkok

Bitcoin Drops to $38,000 for the First Ttime in Six Months

Must read

When stocks fall, bitcoin also falls.

According to CoinDesk, Bitcoin, the world’s largest crypto by market value, fell below $38,000 Friday to its lowest dollar value since August 2021. Afterwards, it regained some ground and was trading at $38,616.17, down 6.7% from its level late Thursday and over 40% from its November 2021 high.

On Thursday, the stock market fell late in the afternoon, prompting the decline.

As investors worry about how a series of expected Federal Reserve interest-rate increases will ripple through markets, cryptocurrencies and stocks have fallen together since the start of the year.

“In the current climate, cryptocurrencies are no longer an isolated risk asset and are being used to respond to changes in global policy”, said Clara Medalie, research director at cryptocurrency market data provider Kaiko. “Both should become volatile when liquidity is turned off”.

According to Kaiko, bitcoin had a high correlation with the stock market since September 2020, another measure of how crypto has become more entwined with markets. This means that when the stock market falls down, crypto does too.

Bitcoin and other cryptocurrencies have fluctuated side-by-side over time, with long stretches when they moved as they pleased.

Due to the widespread adoption of cryptocurrencies among investors, they may have become more sensitive to stock market declines.

In addition to bitcoin’s decline in price, Netflix’s shares fell by 20%, wiping out more than $40 billion in market capitalization. A year ago, Netflix added a much greater number of subscribers than it does this quarter.

Selloffs in popular tech stocks could force investors to sell crypto positions to limit overall losses and meet margin calls, or requests from brokers for cash to cover possible losses on trades made with borrowed funds.

“Several examples of this have already happened. Since bitcoin is such an excellent store of liquidity, it is often drawn on in times of margin calls”, said Chris Bendiksen, head of research at London-based asset-management firm CoinShares.

In addition, the number of cryptocurrency stocks, which follow bitcoin’s performance, dropped. The cryptocurrency exchange Coinbase Global fell 12%. The software company MicroStrategy, whose CEO is a vocal proponent of bitcoin and has invested billions in bitcoin, lost 8.7%.

 

Also Check:

More News

learn spanish online

Latest News