Bitcoin hovered below the $36,000 level Friday morning, after a major stock sell-off in the US Thursday spooked the cryptocurrency market.
The cryptocurrency was down less than 1% on Friday at $35,900.25, according to Coin Metrics, and ether fell 1.1%. Bitcoin has lost about 9% over the past 24 hours.
The sell-off was sparked by a painful day on Wall Street where the Dow Jones Industrial Average lost more than 1,000 points on Thursday and the tech-heavy Nasdaq fell 5%. Both losses marked the worst single-day drops since 2020.
Bitcoin, whose price action remains correlated to those in US equities, has traded in a tight range all year as it struggles to reclaim its highs of late 2021 amid the broader market sell-off.
“That correlation will over time break down, you’ve already seen the beta the breakdown, ie [if] the Nasdaq falls 3% crypto doesn’t fall 9% like it would have last year,” Michael Novogratz, CEO of Galaxy Digital, told CNBC’s “Squawk Box Friday. “But I do think there’s more pain to come.”
On Wednesday, the US Federal Reserve raised its benchmark interest rate by half a percentage point. Further interest rate hikes and tightening of monetary policy have sparked fears that the US economy could go into a recession.
Bitcoin lost a key level when it fell below $37,500, which could indicate a move lower over the next few days, according to Vijay Ayyar, vice president of corporate development and international at crypto exchange Luno. He said the next stop down is $30,000, but if bitcoin doesn’t hold there it could drop to $25,000.