The price of bitcoin fell below $33,000 on Monday – a bearish trend that coincides with a continuing losing streak for US stocks as the market looks bearish.
According to data from Coinbase, as of 9 a.m. ET, bitcoin was down about 5% to around $32,934. The price has fallen to its lowest level since July 2021.
Risk-averse investors are shedding their volatile assets, such as crypto tokens and tech stocks, as the Federal Reserve moves forward with its plan to raise interest rates to fight inflation. The central bank is tightening monetary policy after taking a soft stance during the COVID-19 pandemic.
Matt Dibb, COO of Singapore-based crypto platform Stack Funds, told Reuters, “I think everything within crypto is still classified as a risk asset, and similar to what we’ve seen with the Nasdaq. Most cryptocurrencies are going bad.”
The recent poor performance of the tech sector reflects a dwindling investor appetite for riskier holdings. The tech-heavy Nasdaq Composite ended 1.5% lower last week and last Thursday posted its worst single-day decline since 2020, with the Dow Jones Industrial Average falling more than 1,000 points.
Bitcoin’s current price is well below the all-time high of $69,000 it achieved last November. Its value has fallen by almost 50% in the past six months.
The broader crypto market performed even worse, sinking nearly 7% in the past 24 hours since 9am. Ether is down nearly 6% to $2,397.48, while Solana is down nearly 8% to $71.50.
Bitcoin is the largest cryptocurrency by market cap, which stands at over $626 billion.
According to Bloomberg, Bitcoin’s 40-day performance correlation with the S&P 500 has reached a record high of 0.82. If the stock struggles this week and beyond, major coins and other cryptocurrencies are likely to sink as well.
Last week, the Fed raised its benchmark interest rate by half a percentage point to match market expectations.
Fed Chair Jerome Powell initially launched a “relief rally” by revealing that the bank was not considering major hikes to curb inflation – but that relief turned into panic as investors looked without triggering a recession. The difficulty digested the Fed’s mission to cool the economy.