Bitcoin, ethereum and other major crypto prices have dropped sharply, sparking fears of another crypto crash.
The bitcoin price—its correlation with the Nasdaq now back at record levels—has dropped under $40,000 per bitcoin, down 15% over the last week, while ethereum has seen a similar decline. Other major coins, including BNB, XRP, solana, cardano, luna and avalanche, have seen steeper declines, with solana and luna crashing 30% since this time last week and wiping $300 billion from the combined crypto market.
The crypto sell-off comes as tech stocks are dragging down equity markets in the face of fresh China lockdowns, Russia’s ongoing war in Ukraine and the Federal Reserve beginning to tighten its monetary policy. Now, Arthur Hayes, the co-founder of crypto exchange BitMEX, fears the price of bitcoin and ethereum could fall much further.
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Bitcoin, ethereum and crypto markets “will lead equities lower as we head into the downturn, and lead equities higher as we work our way out of it,” Hayes, who is awaiting sentencing after he and fellow BitMEX co-founder Benjamin Delo admitted in February they failed to put anti-money laundering checks in place at BitMEX, wrote in a blog post, adding he’s betting on a bitcoin and ethereum price “crash” by June.
Hayes expects the bitcoin price to crash to $30,000 over the next two months, with the ethereum price falling as low as $2,500 per ether. “Bitcoin and ethereum will bottom well before the Fed acts and U-turns its policy from tight to loose,” he wrote.
If the bitcoin price were to fall firmly under $30,000, it would be its lowest price since the huge crypto rally through the end of 2020 and into 2021 and would put big bitcoin purchases by the likes of Elon Musk’s Tesla
Hayes also warned that some smaller cryptocurrencies—such as BNB, XRP, solana, cardano, luna and avalanche that are sometimes called altcoins—will not be able to “escape the coming crypto carnage.”
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Meanwhile, other bitcoin and crypto market participants are also worried about the recent downturn.
“A sense of nervousness has crept into the market amid low volumes over the weekend,” the trading team at crypto exchange Bitfinex wrote in an emailed note. “The prospect of more interest rate hikes and increasing concerns over the economic environment may become recurring themes for this year. As is the case with the stock market, we may see more outbreaks of episodic volatility in the months to come.”
On Monday, the bitcoin price dropped under a closely-watched technical level that some think could be a herald of more pain to come.
“The 50-day moving average, which until yesterday seemed like a good place to build support, has now failed, leaving traders to question where the next level of support might be,” Mati Greenspan, the founder of market analysis company Quantum Economics, wrote in his email newsletter.
“Finding support at the psychological level of $40,000 per bitcoin would be a really positive sign on a not-so-positive day. However, the entire area below $40,000 probably has about a hundred levels that different analysts might point to, going all the way down to this year’s low of approximately $32,950.”