Bitcoin and Ethereum sell-offs are accelerating due to a sharp fall in stocks. Prices fell earlier in the week, with Bitcoin and Etherium down almost 10% in one day. Investors abandoned risky assets in droves as stocks suffered another sharp drop, sending the S&P 500 below the 4,000 level for the first time in more than a year.
Market sentiment changed rapidly as fears of a recession grew due to an expected 50 basis point increase in Federal Reserve interest rates in June and July.According to John Lynch, chief investment officer for Comerica Wealth Management, a potential bottom for the S&P 500 could be between 3,850 and 4,000. If there is no recession in 2022, equities could resume rising, as equity investors are not taking cyclical recovery into account when monetary policy no longer supports expensive and technology companies.The desire for risk aversion has caused Bitcoin, Ethereum, Binance Coin (BNB), Ripple (XRP), Solana and Cardano to plummet in price.Bitcoin continued to fall closer to its critical support at around $30,000, last trading at its lowest level since July 2021.According to analysts, if Bitcoin fails to hold at $30,000, it could cause it to plummet.
Any positive geopolitical developments or a weaker than expected CPI report could change the situation. Then we will see investors choosing risky assets again.The cryptocurrency space reflects the performance of US equities because of the increased level of institutional involvement. This means bitcoin is seen more as a technology stock and is often traded on a sense of risk.Meanwhile, Bitcoin bulls, including the first country in the world to accept bitcoin as legal tender, continued to make buyback.Salvadoran President Nayib Bukele tweeted that they bought 500 coins at an average price of $30,744 on Monday.