As global stocks decline, the Crypto market declines

TLDR

Bitcoin price fell from $65,500 to around $64,000 during Asian trading hours. More than $250 million in silver bets were canceled, the largest amount since early July. Ethereum has seen a drop of 7.5-8.5% since the release of the new ETH ETF. The crypto selloff has spread to Asian markets following a sharp decline in US tech stocks. Bitcoin's correlation with global stocks has been unusually negative.

The cryptocurrency market experienced major turbulence on Thursday, July 25, 2024, as the price of major digital assets fell sharply.

The decline followed a broad sell-off in global equity markets, particularly affecting US technology stocks.

Bitcoin, the largest by market value, fell from above $65,500 to around $64,000 within minutes during Asian trading hours.

This represents a decrease of about 3%. The sudden price movement prompted more than $250 million in crash bets, the largest such event since early July.

Ethereum, the second largest cryptocurrency, suffered a more severe fall. The price is down roughly 7.5-8.5%, a move some analysts attribute to the newly launched Ethereum ETF.

The Greyscale Ethereum ETF (ETHE) saw more than $811 million in withdrawals, bringing its assets under management to just under $8 billion.

The decline of the cryptocurrency market seems to be closely related to the movement of traditional financial markets. On Wednesday, July 24, Wall Street experienced its worst trading day since 2022.

The tech-heavy Nasdaq 100 index lost 660 points, while big tech companies like Alphabet (Google's parent company) and Tesla saw big drops in their share prices.

The effects of this US market decline spilled over into Asian markets early Thursday. Japan's Nikkei 225 index fell more than 3 percent, while the MSCI Asia Pacific Index fell 1.5 percent.

Market analysts suggest these moves reflect a broader reassessment of the artificial intelligence sector and persistent concerns over US consumer demand.

Bitcoin's relationship with global stocks has recently shown an unusual pattern. The 30-day correlation between Bitcoin and MSCI's index of global equities is minus 0.20. This indicates that Bitcoin and global stocks are moving in opposite directions, a rare occurrence since 2020.

Despite the recent decline, Bitcoin is still performing well in 2024, with a year-to-date gain of around 51%. This growth has been driven in part by strong interest in US-based Bitcoin exchange traded funds (ETFs).

The crypto market's response to global economic trends highlights its integration with traditional financial markets.

While digital assets are mainstream, they appear to be more susceptible to the same factors that affect stocks and other conventional investments.