Bitcoin experienced a massive sell-off yesterday that sent the entire crypto markets plummeting lower, with BTC erasing a significant amount of the gains it incurred throughout the first half of 2019.
Although it remains unclear as to what could have sparked this sell-off, one prominent analyst is noting that it does appear that there was a correlation between yesterday’s BTC downturn and yesterday’s drop in the global equity markets, which may mean that Bitcoin is, in fact, a correlated asset.
Bitcoin Plummets as Equities Market Faces Instability
At the time of writing, Bitcoin is trading down over 12% at its current price of $8,380, which marks a significant drop from its recent highs of well over $10,000.
This drop took the crypto community by surprise, as it happened quite quickly after BTC dipped below $9,500, which must have been an unforeseen level of critical support.
Because Bitcoin has been unable to post any strong recovery from this recent drop, multiple analysts are noting that it is probable that the crypto will see further losses in the near-future, with many traders setting targets within the $7,000 region.
Yesterday’s drop in the crypto markets came about as the equities markets also faced a significant sell-off.
Mati Greenspan, the senior market analyst at eToro, spoke about this correlation in a recent tweet, pointing to the chart seen in the below tweet that shows the connection between the two market movements.
“Plunge in the US stock market (orange line) proceeded the bitcoin breakout (blue). I know it’s an uncorrelated asset but this is a really strange coincidence,” he explained.
Plunge in the US stock market (orange line) proceeded the bitcoin breakout (blue).
Thomas Lee, the co-founder of Fundstrat Global Advisors, also mused this possibility in a recent tweet, explaining that the connection between the two market moves yesterday confirms his opinion that the S&P 500 will need to set fresh all-time-highs before Bitcoin can “blast off.”
“The downturn in #bitcoin followed the risk-off selloff in #equities. – reinforces our ‘unpopular’ opinion bitcoin does not do well in a ‘trendless macro’ environment. – New highs needed in S&P 500 before $BTC can blast off. Why? We think crypto is retail and thus, risk on,” he explained.