San Francisco – Bitcoin More than a decade ago, it was conceived as “Digital Gold,” a long-term value storehouse that resists broader economic trends and provides a hedge against inflation.
But of Bitcoin Crash price Last month, the vision showed that it was far from reality. Instead, traders are increasingly treating cryptocurrencies as just another speculative technology investment.
Since the beginning of this year, Bitcoin price volatility has closely reflected the price volatility of Nasdaq, a tech-focused benchmark, according to an analysis by data firm Arcane Research. That said, Bitcoin’s price fell by more than 25% last month to less than $ 30,000 on Wednesday (less than half of its November peak). The plunge has become a more widespread collapse and nearly rock step in tech stocks as investors have addressed greater interest. Fees and Ukrainian war.
The growing correlation helps explain why people who bought cryptocurrencies last year saw the investment crater in the hope that it would be more valuable. And while Bitcoin has always been volatile, its growing resemblance to high-risk tech stocks clearly shows that its promise as a transformative asset has not been fulfilled.
“It outlaws the argument that Bitcoin is like gold,” said Vetle Lunde, an analyst at Arcane. “There is evidence to support that Bitcoin is just a risk asset.”
Arcane Research has assigned a numerical score from 1 to -1 to understand the price correlation between Bitcoin and Nasdaq. A score of 1 showed the exact correlation, meaning that the prices moved in tandem, and a score of -1 showed the exact difference.
Since January 1st, the 30-day average of Bitcoin and Nasdaq scores has approached 1 and reached 0.82 this week. This is the closest ever to an exact one-to-one correlation. At the same time, Bitcoin price volatility diverged from gold price volatility, the asset it has been most often compared to.
Convergence with Nasdaq grew during the coronavirus pandemic. Institutional investor favorite Hedge fundFunds and family offices that have poured money into the crypto market.
Unlike the idealists who drove their initial enthusiasm for Bitcoin in the 2010s, these professional traders treat cryptocurrencies as part of a larger portfolio of high-risk, high-paying technology investments. Some of them are under pressure to secure the short-term interests of their clients and are less ideologically committed to the long-term potential of Bitcoin. And as they lose more confidence in the tech industry, it affects their Bitcoin transactions.
“Five years ago, it was the people who used cryptocurrencies,” said Mike Boroughs, founder of the blockchain investment fund Fortis Digital. “Now we have people who span the entire range of risk assets, so when they are beaten over there, it affects their psychology.”
Stock market concerns, affected by severe economic trends such as Russia’s invasion of Ukraine and historic inflation, are particularly evident in this year’s decline in tech stocks. Meta, formerly known as Facebook, has fallen by more than 40% this year. Netflix has lost 70% of its value.
Cryptocurrency exchange Coinbase shares plunged 26% on Wednesday after reporting Revenue decline and $ 430 million loss In the first quarter. The company’s share price has fallen by more than 75% this year as a whole.
Nasdaq is already Bear market territoryIt ended on Wednesday, 29 percent down from mid-November records. November was also when Bitcoin’s price peaked at nearly $ 70,000.Crash Bitcoin Evangelist Reality Check..
Edmoya, a cryptocurrency analyst at trading company OANDA, said: “And what happened is that inflation started to get very ugly and Bitcoin lost half of its value.”
The prices of other cryptocurrencies have also been crushed. The price of Ether, the second most valuable cryptocurrency, has fallen by about 25% since early April to less than $ 2,300. Others like Solana and Cardano have also experienced a sharp drop this year.
Russia-Ukraine War: Significant Progress
On the ground. A Ukrainian counterattack near Kharkov It seems to have contributed to a significant reduction in Russian artillery in eastern cities. However, Moscow’s army is advancing along the rest of the front line.
Bitcoin has recovered from its previous big losses and its long-term growth is still impressive. Before the crypto-price pandemic boom, its value was well below $ 10,000. True believers, who call themselves Bitcoin’s greatestists, categorically insist that cryptocurrencies will eventually break their correlation with risk assets.
Michael Saylor, CEO of Business Intelligence Company MicroStrategyHas spent billions of dollars on Bitcoin from his company and has accumulated over 125,000 coin stockpiles. The company’s share price has fallen about 75% since November due to soaring Bitcoin prices.
In an email, Sailor blamed the crash of “Traders and Technocrats” who did not appreciate the long-term potential of Bitcoin to transform the global financial system.
“In the near future, the market will be dominated by people who don’t really understand the strengths of Bitcoin,” he said. “In the long run, maximalist proves right, because billions of people need this solution and awareness spreads to millions of people every month.”
