Bitcoin (BTC) slumped on Wednesday, sinking below a key support level and triggering mass liquidations across the crypto market. The token’s latest slump appears to be directly tied to a drop in major U.S. technology stocks.
BTC sank over 5% in the past 24 hours, and is trading around $38,500 as of writing. In comparison, the Nasdaq 100 index slumped nearly 4% on Tuesday as investors feared an economic slowdown that could hurt earnings.
Tech stocks down, BTC-Nasdaq correlation up
Losses in tech stocks spilled over to BTC. The token has behaved exceedingly like U.S. tech stocks this year. Correlation between BTC and U.S. tech stocks also hit a record high earlier in April, according to data from Bloomberg.
BTC’s sensitivity to macro factors such as inflation and monetary policy make it behave more in line with stocks. This has also cost the token its potential status as a digital safe haven.
Still, the token has slightly outperformed most major technology stocks this year.
This correlation has been going on for a majority of 2022, and typically this isn’t the best recipe for success for crypto. We want to see the correlation be non-existent… that tends to be a signal that bull runs have the highest probability of coming to fruition.
-Blockchain data firm Santiment
The Nasdaq’s latest decline was driven by fears of weak earnings from major technology firms. Google owner Alphabet slumped 4% as it missed quarterly earnings. Investors also dumped Microsoft shares ahead of its earnings after the bell, although the company managed to edge past expectations.
Tesla was also a major contributor to declines, as its sank 12% on fears that CEO Elon Musk might sell some of his holdings in the company to fund his Twitter buy.
Mass liquidations in the crypto market
The broader crypto market also appeared to be falling in line with major technology stocks. Recent losses in the market saw $290 million in long positions closed in the past 24 hours, the highest in over two weeks.
BTC saw $109 million in positions liquidated, while Ethereum liquidations were $88 million.
Given crypto markets had bounced on Monday, many traders were positioning for further gains, data from Coinglass shows. 86% of all liquidations were long positions.
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