Further losses on Wall Street could prompt BTC to slide to prices not seen since late 2020.
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Things went from bad to worse for Bitcoin over the weekend — with the world's biggest cryptocurrency sliding to lows of $33,393.61.
CoinMarketCap data shows BTC has fallen to its lowest level so far this year, sparking fears that the digital asset could test support at $30,000.
The Crypto Fear and Greed Index — which tracks sentiment among investors — is flashing a score of 11, indicating "Extreme Fear."
BTC's weekend plunge means its value is currently 51% lower than the all-time high of $68,789.63 set back on Nov. 10, 2021.
As of 9am London time on Monday morning, Bitcoin has dipped by 3.25% over the past 24 hours — extending to losses of 14% over seven days.
And it's a similar picture across cryptocurrencies with a smaller market cap, with a sea of red and double-digit losses across the board.
Bitcoin's plunge has painful echoes of the carnage seen last July, when its value briefly dipped below $30,000.
The crypto markets are vulnerable right now because of a close correlation with the stock market.
Traders are contending with a potent mix of concerns right now — including spiraling energy prices, Russia's invasion of Ukraine, soaring inflation and new COVID lockdowns in China that are disrupting global supply chains.
Further losses on Wall Street could prompt BTC to slide to prices not seen since late 2020, when the bull run started to gain momentum.
At the time of writing, S&P 500 futures were down 0.86%, while Dow Jones futures had slid 0.73%.
Gloomy Start to the Week
Over the weekend, turbulence in the crypto markets was exacerbated by the UST stablecoin losing its peg to the U.S. dollar.
Bitcoin has now fallen for four days straight — and there are fears that the correction may only worsen in the week ahead. Zooming out a little bit further, BTC has clocked up six red weekly candles in a row.
While sell-offs in recent days appear to have been triggered by short-term investors, there are signs that whales are getting in on the action too.
Accurately determining what's going to happen next is easier said than done, but some analysts are anticipating a prolonged bear market based on Bitcoin's past behavior. On Twitter, @inmortalcrypto wrote:
"In the previous cycles, it took about 400 days to find the bottom. In the current cycle, 178 days have passed since the top. So, if this cycle is similar, we are halfway."
As you'd expect, ardent Bitcoiners are continuing to put on a brave face despite the current market malaise.
They argue that the current fluctuations will be a distant memory when BTC is trading for hundreds of thousands of dollars — and claim current prices represent a good entry point.
But for those who are unaccustomed to the wild fluctuations we see in the crypto markets, jumping in right now is comparable to catching a falling knife — and more pain may lie ahead before there's any upside.
