It doesn't seem that long ago.
On Nov. 10, 2021, bitcoin reached its all-time high of $69,044.77. On that same day, the Dow Jones Industrial Average finished down 112.24%, or 0.3%
But things changed rapidly and as of Monday, May 9, bitcoin was down nearly 5% to $33,001 at last check. The price is off 14.4% from 7 days ago and down a stunning 52.4% from that day in November.
Ethereum was down 6.4% to $2,407.97 and off 15% for the week. The cryptocurrency is down 38.5% from a year ago.
Regulatory Clarity
And dogecoin was off about 7% to $0.117367. The meme coin is off 11.7% from a week ago, and down nearly 82% from a year ago.
Decentralized finance or DeFi crypto, solana, was down 7.4% to $71.65, and off 20.4% from a year ago. Avalanche was falling 4.5% to $49.66, but up 29.3% from a year ago.
Meanwhile, the Dow Jones Industrial Average was down 563 points or 1.63% by late morning.
"I think what we’re seeing across the board is just a sale of assets, and that’s come to include bitcoin and other crypto products," said Scott Sheridan, market expert, and CEO of tastyworks. "Bonds, although they’ve turned positive today, led this decline, and then you had equities and crypto sort of move lower in tandem."
Sheridan said until there is regulatory clarity "investors are limited with respect to how they can trade bitcoin."
"I strongly believe once the regulatory issues are settled, we’ll see larger institutions become involved along with options and short selling," he said. "While many people tend to think of short selling as a negative, the truth is that it’s what creates a liquid two-sided market. So we need that."
You Want Fries With That?
Billionaire Michael Saylor, has been a bitcoin evangelist, and his company MicroStrategy (MSTR) , which has had bitcoin on its balance sheet since 2020, was( down nearly 9% to $268 at last check.)
Saylor tweeted a doctored image of himself as a McDonald's (MCD) cashier holding a serving of french fries.
"Monday morning is time to get back to work. #Bitcoin," the caption read.
Gaming platform Roblox (RBLX) was off 3.4% to $26.87 and other metaverse stocks like Facebook parent Meta Platforms (FB) and Nvidia (NVDA) were in the red.
The crypto price drop lit up social media, with one person posting an image of a man clutching his chest. The caption read "When you buy the dip, but it keeps dipping."
Another person posted a variant of the Nike "Just Do It" slogan captioned "How to survive a #Cryptocrash" and the line "Just Hodl It," the crypto-speak version of "hold."
NFT, non-fungible token prices, have also been falling, prompting one person to tweet a video clip of divers tumbling into a swimming pool with a caption reading live look at NFT prices.
"This is close," one person responded. "Remove the water and it’s a better analogy."
The Wall Street Connection
"The crypto market is showing the highest positive correlation with stock indexes ever in history," said Winston Ma, managing partner of CloudTree Ventures, Author of "The Digital War – How China’s Tech Power Shapes the Future of AI, Blockchain and Cyberspace." "Bitcoin, ETH and other cryptocurrencies have been closely correlated to movement in equity indices, and that trend is continuing."
Ma said "investor sentiment towards inflation and Fed monetary policy continued to hit riskier assets this Monday."
He said that as crypto prices fall, even the “stablecoins” became destabilized.
"Investors were spooked by a rare event — the stablecoin TerraUSD briefly losing its U.S. dollar peg," he said. "Because stablecoins are the currencies for the entire crypto market, the destabilized 'stablecoin' may spark fear about the systemic risk of the overall market, albeit briefly."
Frank Corva, cryptocurrency specialist with Finder, said Terra was one of the hardest hit of the major cryptos this weekend.
"Fears of UST, the algorithmic stablecoin on the Terra blockchain that is pegged to the US dollar, losing its peg circulated online over the weekend, seemingly causing LUNA’s price to drop," he said.
Corva said that unlike other stablecoins like Tether and USD Coin, which rely on reserve assets to support their peg, the value of UST is primarily dependent on LUNA tokens, which are burned, or permanently destroyed, to mint UST tokens.
