Market Wrap: Bitcoin Sell-Off Deepens as Correlation With Stocks Rises

BTC is down 40% from its November peak, compared with a 16% drop in the Nasdaq 100 over the same period.

AccessTimeIconApr 11, 2022 at 8:46 p.m. UTC
Updated Apr 10, 2024 at 2:09 a.m. UTC
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Bitcoin (BTC) continued its descent on Monday, briefly dipping below $40,000 and tracking losses in global equities.

Investors appear to be reducing their exposure to speculative assets, including stocks and cryptos, amid concerns about inflation and slower economic growth. Further, the 10-year Treasury yield rose to a new three-year high on Monday at 2.78%, which reduces the present value of expensively priced tech stocks.

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Gold, a traditional safe haven, traded higher on Monday, while the Chicago Board Options Exchange's CBOE Volatility Index (VIX), a measure of the stock market's expectation of volatility based on S&P 500 index options, rose above 20, similar to what occurred in early February. That indicates uncertainty among investors.

In crypto markets, most alternative cryptocurrencies (altcoins) underperformed bitcoin on Monday. Ether (ETH) was down 8% over the past 24 hours, compared with a 16% drop in THORChain's RUNE token, and a 6% decline in BTC over the same period.

For now, technical indicators suggest lower support at $37,500 and $40,000 could stabilize BTC's down move.

Latest prices

Bitcoin (BTC): $40065, −7.48%

Ether (ETH): $3011, −8.67%

S&P 500 daily close: $4413, −1.69%

Gold: $1957 per troy ounce, +0.79%

Ten-year Treasury yield daily close: 2.78%

Bitcoin, ether and gold prices are taken at approximately 4pm New York time. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price. Information about CoinDesk Indices can be found at

No capitulation yet

Bitcoin's pullback below $43,000 triggered a wave of long liquidations over the weekend.

Liquidations occur when an exchange forcefully closes a trader’s leveraged position as a safety mechanism due to a partial or total loss of the trader’s initial margin. In this case, traders who were long bitcoin are forced out of their positions as price drops, which can accelerate declines in the spot market.

Still, long liquidations over the past few weeks have not reached an extreme, especially compared with early March. That could point to further selling pressure until BTC experiences a more decisive down move with high trading volume, which typically indicates capitulation among short traders.

Bitcoin total liquidations (CoinDesk, Coinglass)
Bitcoin total liquidations (CoinDesk, Coinglass)

Trading volume across bitcoin spot exchanges remains low, according to CoinDesk data. Further, there was no uptick in volume over the weekend despite BTC's 7% price dip.

The chart below shows the ratio of buy volume versus sell volume in bitcoin's perpetual swaps market (30-day moving average), which is a type of crypto derivative trading product. The ratio dipped below one, suggesting dominant bearish sentiment among bitcoin traders.

Bitcoin buy/sell volume (CoinDesk, CryptoQuant)
Bitcoin buy/sell volume (CoinDesk, CryptoQuant)

Rising correlation

Despite crypto-specific events, such as The Luna Foundation Guard's (LFG) accumulation of 40,000 BTC, bitcoin has largely tracked moves in stocks over the past year.

The chart below shows a new high in the 90-day correlation between bitcoin and the tech-heavy Nasdaq 100 index. While the correlation is still relatively low, it has remained elevated since the pandemic-induced sell-off across speculative assets in 2020.

In a Monday newsletter, FundStrat, a global advisory firm, wrote that macro uncertainty could outweigh LFG's reserve purchases. "Following previous LFG purchases, we witnessed a rise in realized market cap as other [traders] followed LFG's lead," the firm wrote. "However, realized market cap has remained flat since this latest purchase, indicating marginally less appetite for buying this weekend's dip."

It appears that investors have tightened their risk budget, which is typical during times of market turbulence. After all, global volatility has been compressed throughout the past 15 years of unprecedented monetary stimulus.

Bitcoin, Nasdaq correlation (CoinDesk, Koyfin)
Bitcoin, Nasdaq correlation (CoinDesk, Koyfin)

Altcoin roundup

  • Ethereum's first Mainnet shadow fork goes live as move to PoS continues: Ethereum's first mainnet shadow fork went live today, as the developers of the world's second-largest cryptocurrency by market cap continue transitioning the backing network to a proof-of-stake (PoS) model. The shadow fork is a way to "stress test our assumptions around syncing and state growth," tweeted Parithosh Jayanthi, an Ethereum Foundation developer, on April 10. Read more here.
  • Terra’s LUNA leads slide: LUNA fell by as much as 8% even as Luna Foundation Guard (LFG) added $173 million in bitcoin to its wallet over the weekend, bringing its total holdings to 40,000 bitcoin, as reported. The LFG is a newly formed nonprofit that aims to maintain the Terra ecosystem by building a $10 billion reserve in bitcoin for backing the UST, a stablecoin issued by Terra, one of LFG’s main backers. Read more here.
  • Huobi, Kucoin, others lead $250M Toncoin ecosystem fund: The venture arms of cryptocurrency exchanges Huobi and Kucoin are among the backers of a new $250 million ecosystem fund to support projects built on Toncoin, the reincarnation of failed blockchain project TON. Read more here.

Relevant reads

Other markets

Most digital assets in the CoinDesk 20 ended the day lower.

Largest winners:

There are no gainers in CoinDesk 20 today.

Largest losers:

Asset Ticker Returns Sector
Filecoin FIL −15.2% Computing
Polkadot DOT −12.4% Smart Contract Platform
Chainlink LINK −12.3% Computing

Sector classifications are provided via the Digital Asset Classification Standard (DACS), developed by CoinDesk Indices to provide a reliable, comprehensive, and standardized classification system for digital assets. The CoinDesk 20 is a ranking of the largest digital assets by volume on trusted exchanges.


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Damanick Dantes

Damanick was a crypto market analyst at CoinDesk where he wrote the daily Market Wrap and provided technical analysis. He is a Chartered Market Technician designation holder and member of the CMT Association. Damanick is also a portfolio strategist and does not invest in digital assets.

Angelique Chen

Angelique is a market contributor at CoinDesk.

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