The crypto market was in a sea of red on Friday as bitcoin, the world’s largest crypto-currency by market capitalization, tumbled more than 10% over the past 24 hours.
Bitcoin is down about 40% from its all-time high, compared with a 10% decline in the Nasdaq 100 Index.
It appears that global investors have entered the year with a reduced appetite for risk, and so the correlations between speculative assets such as cryptocurrencies and equities have increased, which results in widespread losses.
Bitcoin is down roughly 40% from its all-time high of almost $69,000, while the S&P 500 is down about 7% from its peak, compared with a 10% drawdown in the Nasdaq 100 Index.
Alternative cryptocurrencies (altcoins) led the way lower on Friday given their higher risk profile relative to bitcoin.
Ether, the world’s second-largest cryptocurrency by market cap, was down about 13% over the past 24 hours, compared with a 14% drop in AVAX and a 16% drop in FTM over the same period.
Despite the losses, some analysts still foresee a short-term bounce. “We expect BTC to find a bid around the $35K mark, close to 50% from the top.
In the short term, we can bounce to challenge the $45K-$50K zone, but the overall outlook remains bearish as liquidity remains tight,” Pankaj Balani, CEO of Delta Exchange, a crypto derivatives trading platform, wrote in an email to CoinDesk.
For now, technical indicators show nearby support at about $37,000 for bitcoin, although stronger support at $30,000 could stabilize a deeper correction.
Many altcoins are into support at their summertime 2021 lows, making it critical that bitcoin holds support as it sets the tone for the cryptocurrency space,” Katie Stockton, managing director of Fairlead Strategies, a technical research firm, wrote in a Friday briefing.
According to data from CoinGecko, the total market cap of the cryptocurrency industry has fallen 11% to $1.9 trillion as of Friday afternoon U.S. time from an all-time high of $3.1 trillion in November, 2021.
Coin Desk.com / ABC Flash-Point News 2022.