BTC has been closely correlated with the tech-heavy Nasdaq 100 — and on Thursday, this index officially entered correction territory.
Bitcoin plunged to $38,560.45 in the early hours of Friday — its lowest level since August.
The world's biggest cryptocurrency has fallen by 6.68% over the past 24 hours.
Ether, Binance Coin, Cardano and Solana have all fared far worse, with some altcoins shedding 9% of their value. ETH neared $2,800 at one point.
Once stablecoins are taken out of the equation, the top 30 cryptocurrencies by market cap are currently in the red.
BTC has been closely correlated with the tech-heavy Nasdaq 100 — and on Thursday, this index officially entered correction territory.
On Wall Street, the Nasdaq 100 ended the day at 14,846.46 — that's a fall of more than 10% from the all-time highs that were set in mid-November.
Why is This Happening?
Further pain is expected as the Fed prepares to raise interest rates and end the stimulus measures that buoyed the economy during the pandemic.
And in other developments, Russia's central bank is considering an outright ban on trading and mining cryptocurrencies.
Moscow fears such digital assets can undermine financial stability, harm investors, and undermine its monetary policy.
Over on Crypto Twitter, Friday's painful losses were linked to the upcoming expiry of Bitcoin options.
According to @invest_answers, BTC bears need the price to remain below $41,000 in order to clock up $132 million in gains.
After coming tantalizingly close to breaking $3 trillion for the first time, the total market cap of all cryptocurrencies has now slumped to $1.8 trillion.
Some analysts are now fearful that Bitcoin will slide further in the weeks ahead — potentially toward $35,000.
And in a research note, Delphi Digital explained all risk assets — BTC in particular — are being hammered by a recent spike in bond yields, adding:
"The market is now pricing in at least four rate hikes this year, with the probability of a fifth ticking up this week."
Perhaps of greater concern to BTC investors should be the fact this sudden pullback wasn't followed by a significant rebound, as in early December.
Bitcoin maximalists tend to shrug off sharp declines in price — and instead prefer to take a long-term view. One of them, Raphael Schön, tweeted:
"Bitcoin is digital gold. It's also an open, public payment network. It's not digital tulips and won't go away. It's empowering people around the world. It's just getting started."
All eyes will be on the next meeting of the Federal Open Market Committee, which is scheduled to take place on Jan. 25 and 26.
