Bitcoin (BTC) Price Dips Significantly As Crypto Market Losses $400 Million; Here’s Why

Bitcoin, the largest cryptocurrency by market cap, has continued to correlate with other high-risk assets. The big bull took a sharp nose dive on the 5th of May, and up until press time, Bitcoin (BTC) is still trading downwards.

Over $400 Million Liquidations in Last 24 hrs

At the time of this writing, Bitcoin trades at $36,421, as its 24 hour-loss jumps above 8%. This has brought the 7-days consecutive drop to 7.85%. Similarly, Ethereum (ETH) has imitated Bitcoin’s downward move, and has dipped significantly from its previous levels. With over 6% losses from the past 24-hours, Ether, which was very close to tapping $3,000 the day before, is now sitting at $2,738.

Overall, the market has sustained over $406 million in liquidations, over the last 24-hours, according to data from Coinglass. But the genesis of this drop, which began with Bitcoin dropping 5% on the 5th of May, after nearly clenching $40,000, seems to be tied to the stock market.

S&P 500 – Bitcoin Correlation 

 It appears that Bitcoin didn’t dip, until the stock market selloff kicked in on Thursday. Nasdaq saw a 5% decline and the cryptocurrency market immediately followed suit. In the same manner, Bitcoin and other cryptocurrencies surged on Wednesday and also recorded a bullish spike, but this was not independent of the stock market. The S&P 500 recorded a notable performance for the first time in two years, when it rose 3% on that day, and the cryptocurrency market benefitted from this rise.

The correlation that the cryptocurrency market has with the stock market had been noticed by market players in the past. However, this year, particularly within the last two months, the market has recorded a major upsurge in Bitcoin’s correlation with the stock market. On the 22nd of April, Bitcoin dipped 5% for the same reasons.

Prior to this, data from Arcane Research revealed that Bitcoin’s correlation to the S&P 500 hit the highest level, for the first time since October 2020, when it hit 0.49. 

Sunil is a serial entrepreneur and has been working in blockchain and cryptocurrency space for 2 years now. Previously he co-founded Govt. of India supported startup InThinks and is currently Chief Editor at Coingape and CEO at SquadX, a fintech startup. He has published more than 100 articles on cryptocurrency and blockchain and has assisted a number of ICO’s in their success. He has co-designed blockchain development industrial training and has hosted many interviews in past. Follow him on Twitter at @sharmasunil8114 and reach out to him at sunil (at) coingape.com

The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.