As the overall crypto space enters a deeper correction, nearly $250 billion have been eroded from the overall crypto space. Bitcoin (BTC), in particular, has led to more than $90 Billion in investor wealth erosion.
Bitcoin (BTC), currently trading 7.5% lower at $43,841 and with a market cap $819 billion, has a price of $43,841 as of press-time. Analysts believe that the market correction was caused by the contagion of China Evergrande Group.
The global market is expected to remain unstable following this week’s meeting of the Federal Reserve. So, we can expect some volatility and correction in crypto. Speaking to , Jonas Luethy, a sales trader at GlobalBlock, the U.K.-based digital asset broker, said:
“Some have attributed the sudden dip to the currently ongoing Evergrande situation in China which has already caused turmoil in traditional markets. Analysts have suggested a choppy week is ahead, with a potential pullback to as low as US$41,000.”
Bitcoin’s Correlation With Traditional Stock Indices
The BTC performance has been often correlated with the traditional stock indices like the S&P 500 and the Nasdaq 100 as the world’s largest cryptocurrency continues to get more integrated with the global financial markets. As shown in the below charts, Bitcoin’s correlation with the tech-heavy Nasdaq has been consistently positive since theMarch 2020 crash.
However, going ahead, investors must be prepared for volatility. Scott Bauer, chief executive of Prosper Trading Academy believes that news from China could be a negative for crypto. He further added:
“On a day like today, where you have the perfect storm, I think people just go to, ‘What can I sell quickest? What do I have access to at 2 in the morning? If they’re holding crypto, which is obviously an around-the-clock market, maybe that’s the first place they look”.
El Salvador was the first to jump in to purchase the Bitcoin dip. El Salvador added 150 Bitcoins to its treasury, now holding 700 BTC.
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