At the start of trading on Monday, Bitcoin’s price momentarily dropped below $42K, losing at least 3.5% from the peak on the previous day. That was clear evidence of a tug-of-war between bullish retail traders and the professional bidders who sold the risky assets in responding to pressure on stock prices.
In general, Bitcoin has been losing 1% in the past 24 hours and 8.5% over the week. Ethereum has lost 2% and 9% in the last 7 days. Notably, the top altcoins have also lost 1.3% (Dogecoin) and up to 7.4% (Terra).
Based on CoinMarketCap, the cumulative capitalization of the crypto market lost 2% to $1.94 trillion in a day. That clearly shows the increased pressure on weaker altcoins as a result of the curtailment of risk demand. The share of bitcoins in the capitalization of the whole crypto market is around 41.3% (+0.6 points in 7 days and +0.3 in a day).
By the start of the day on April 11, the crypto fear and greed index had lost 2 points to 32, settling currently within the fear territory.
In that context, the crypto market is also increasing its correlation with the dynamics of the stocks that are guided by the high-tech NASDAQ index. That relationship is easily and readily explained by the fact that in both of these scenarios, the investors are now betting on a progressive idea and not on a stable income.
The original plan, where the cryptos would become an alternative haven for capital outside of the traditional banking network, has not been tested by the military events in Ukraine. As it turns out, the cryptocurrency exchanges value the idea of legally earning commissions on transactions and the placement of tokens more than the original off-system and a political approach.
Therefore, the crypto market is largely becoming a platform for the assets of the ever-smaller projects in the technology space. There is nothing wrong with that in the long term, but currently, such a direct correlation with stocks might do a disservice. Taking into context the backdrop of tightening monetary policy, stocks are under huge pressure.
Amid this deteriorating sentiment, Bitcoin plunged to a 50-day moving average near $42K. Any fixing below this level might open a direct path to the zone of March lows near $38K.