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Bitcoin continued to fall this week as investors were prompting a widespread sell-off in the market, triggered by concerns about the possible bankruptcy of one of China's largest developers - China Evergrande Group.
So, on Monday, BTC closed 7.4% lower and valued at $ 44,061. Earlier, it fell 10.7% to below $ 43,000, which is its lowest rate since early August.
Other digital assets, such as Bitcoin Cash, EOS and Ether, retreated as well.
"Some have attributed the sudden dip to the currently ongoing Evergrande situation in China which has already caused turmoil in traditional markets," said Jonas Luethy, a sales trader at GlobalBlock. "Analysts have suggested that a choppy week is ahead, with a potential pullback to as low as $41,000," he added.
Bybt said the rate of decline accelerated when more than 25,8000 traders liquidated their accounts.
Leah Wald, CEO of Valkyrie Investments, said: "This is part of a well-established pattern where it sells off as traders cash in their riskier assets to cover margin calls and/or sit on the sidelines until markets calm down and they feel more comfortable going back into riskier positions,"
Although Bitcoin does not always trade in tandem with financial markets - a characteristic that makes it a tempting proposition in terms of portfolio diversification - its correlation on a 30-day basis with Nasdaq 100 has been consistently positive since February last year. A value of 0.5 means that they are moving in the same direction quite often these days.
Investors say that while the link to tech stocks makes sense, both types of investments can be seen as attractive to the same pool of tech-savvy investors (strong correlation is also found for small-cap stocks in the S&P 500 index). So, as Bitcoin becomes more integrated into global financial markets, it must be more responsive to changes in risk appetite that are driving global sentiment.
El Salvador President Nayib Bukele said they "bought the dip" in Bitcoin when they added 150 tokens to boost their total assets to 700 - about $ 32 million based on current prices. The country recently adopted Bitcoin as legal tender, which sparked controversy, technical glitches and protests.
Undoubtedly, the move is one of the reasons why BTC hit a four-month high. Even so, there is still a long time before the token can recover from the sell-off last May.
"On a day like today, where you have the perfect storm, I think people just go to, 'What can I sell quickest? What do I have access to at 2 in the morning?,'" said Scott Bauer, CEO of Prosper Trading Academy. "If they're holding crypto, which is obviously an around-the-clock market, maybe that's the first place they look," he added.
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