Bitcoin dropped more than 10% on Monday, dipping below $31,000 after touching a recent high of $40,000 last week.
The price of bitcoin dropped 10.5% at $30,953.94, according to Coin Metrics. The cryptocurrency is at its weakest point since July when Bitcoin traded as low as $29,839.80 – the last time bitcoin traded below $30,000. It's about 53% from its all-time high, which it hit in November. Ether fell 11.6% to $2,269.39.
Cryptocurrencies have been steadily extending their declines since Thursday, when they fell sharply amid a broader stock market sell-off, in which the Dow Jones Industrial Average and Nasdaq Composite posted their worst single-day drops since 2020. Losses steepened over the weekend. Crypto trades 24 hours a day, including weekends.
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The crypto market, led by bitcoin, has remained highly correlated with the moves in equities, particularly tech stocks, for about a year. All three of the major stock indexes were lower on Monday.
"Equity and Crypto markets are selling off across the board due to a broad shift from risk-off to heavy risk-selling," said Steven McClurg, chief investment officer at Valkyrie Investments.
"The correlation between the two asset classes has grown more pronounced in recent months due to the number of publicly traded companies involved in blockchain and digital assets, and we are likely to see these markets move largely in lockstep for at least some time," McClurg continued.
Additionally, bitcoin currently has no counter-trend signals but the equity market looks poised to rebound this week, which could carry over to cryptocurrencies, according to Fairlead Strategies founder Katie Stockton.
Key U.S. inflation data for the month of April, due to be released Wednesday, could be a temporary "turning point" for bitcoin, according to Yuya Hasegawa, crypto market analyst at Japanese bitcoin exchange Bitbank.
"If the CPI shows no sign of slowing down, it will add to the fear of faster monetary tightening," Hasegawa said. "But other inflation metrics are starting to slow down and the April CPI could follow suit, which in turn will likely alleviate the market's concern and help recover its risk sentiment."
It wouldn't be enough to completely reverse market sentiment, however, he said.
Bitcoin needs to maintain the key psychological level of $33,000 to prevent further deterioration of technical sentiment, Hasegawa added. He sees it trading between $30,000 and $38,000 this week.
Correction: This story's headline was updated to reflect that the price of bitcoin dropped below $33,000 Monday morning. A previous headline misstated the day's lowest price.