Why Bitcoin, ether, dogecoin, other crypto prices are crashing today

Ether, the second largest crypto by market capitalization, was also down more than 6%, dipping below $3,000. Dogecoin, Shiba Inu tanked nearly 10% each while other tokens like Avalanche, Cardano, Solana, Terra, XRP were trading with cuts in the range of 6-11% over the last 24 hours. The global cryptocurrency market cap today fell 6% to $1.93 trillion, as per CoinGecko.

Bitcoin, the largest cryptocurrency by market value, may tumble to $30,000 by June, as per Arthur Hayes, the co-founder of crypto trading platform BitMEX. In a blog post, he also said the same dynamic could drive Ether to $2,500. “Bitcoin and Ether are highly correlated to the Nasdaq 100. If the NDX tanks, it will take crypto down with it,” he said.

Cryptocurrencies have been lower by concerns about tighter monetary policy. Even the buzz around last week’s Bitcoin 2022 conference in Miami wasn’t enough to reverse the trend. 

“Fed tightening by 0.5 percentage point steps at upcoming meetings as well as $95 billion per month balance sheet run-off sent crypto markets spiraling lower,” said Teong Hng, chief executive of Hong Kong-based Satori Research, as quoted by Bloomberg.  

Bitcoin’s tendency to move in sync with assets such as US tech stocks makes the drop less of a surprise after a tough week for American markets. Its correlation with the Nasdaq 100 Index is now back at record levels. 

Investors are selling cryptocurrencies ahead of the mid-April tax deadline in the US, as per David Duong, head of institutional research at Coinbase Global Inc., who is seeing a repeat of trends that also played out in 2021. “Last year we saw market players selling digital assets to make tax-related payments,” he wrote in a recent note. He added that investors are also souring on riskier assets as the Fed raises interest rates.

(With inputs from agencies)