Bitcoin (BTC-USD) weakens to under $42K, its lowest level since March 21, as investors become more risk averse, eschewing tech stocks and cryptocurrencies alike.
The decline continues as the U.S. dollar remains strong. The U.S. Dollar Index (DXY) recently was 99.79 and rose to over 100 earlier on Monday. Over the weekend, the co-founder of a crypto trading platform warned that bitcoin (BTC-USD) and ether (ETH-USD) are likely to fall furhter, citing the world's biggest cryptocurrency's recent correlation with technology stocks.
"The DXY strength is part of it, but overall, it's more market uncertainty, macro concern, and a focus on what rates will do," Noelle Acheson, head of marketing insights at Genesis Global, told CoinDesk.
In recent trading on Monday, bitcoin (BTC-USD) fell 3.1% over the past 24 hours to ~$41.3K and ethereum (ETH-USD) slid 5.6% to ~$3.07K.
Arther Hayes, co-founder of BitMEX, pointed out in an April 10 blog post that for both bitcoin (BTC-USD) and ether (ETH-USD), their short-term (10-day) correlation with the NDX remain high and that medium-term correlation (30-day and 90-day) correlations are moving up.
"This is not what we want," Hayes wrote. "For me to hoist the flag in support of selling fiat and buying crypto in advance of an NDX meltdown (30% to 50% drawdown), correlations across all time frames need to trend demonstratively lower."
He expects tech stocks, represented by the Nasdaq 100 Index (NDX), to drop as central banks raise rates around the world to fight inflation as that will tighten the amount of money in the economy.
With the weakness in bitcoin (BTC-USD), the usual group of BTC-linked stocks also swoons in Monday premarket trading. MicroStrategy (MSTR) falls 2.8%, Coinbase Global (COIN) -2.5%, Bakkt Holdings (BKKT) -1.0%, Riot Blockchain (RIOT) -3.9%, Marathon Digital (MARA) -3.8%, HIVE Blockchain (HIVE) -2.2%, Hut 8 Mining (HUT) -2.1%.
In an opposing view, Barstool Sports' Dave Portnoy touted bitcoin last week as "almost too big to fail"