Bitcoin flash crash below $36,000, bulls warn not to buy U.S. stocks before they bottom

Investors have a strong risk aversion mentality. The currency circle was bloodbathed on Friday (21st), and Bitcoin fell by more than 12%, breaking through US$36,000. This is the first time since July last year. The total market value of cryptocurrencies has peaked since November last year. A total of $1 trillion evaporated.

Cryptocurrency bull Mike Novogratz warned investors not to jump in now, as cryptocurrencies cannot rise until U.S. stocks hit the bottom.

Bitcoin flash crash below $36,000, bulls warn not to buy U.S. stocks before they bottom

Bitcoin (BTC) and the entire cryptocurrency market both recorded their second-biggest declines in U.S. dollar terms, according to Bespoke Investment Group. Bitcoin has fallen by 45% since its peak in November last year, erasing $600 billion in market value, and the overall cryptocurrency market value has evaporated by $100 million over the same period.

The possibility that the U.S. Federal Reserve (Fed) may accelerate interest rate hikes will not only hit the U.S. stock market, but also cryptocurrencies, and the trend between the two has been synchronized on a daily basis.

Antoni Trenchev, co-founder of Nexo, said that the Nasdaq 100 index of bitcoin and heavyweight technology stocks has a correlation coefficient that is approaching a 10-year high.

Another example that proves that Bitcoin and tech stocks are closely related is Cathie Wood’s well-known ARK Innovation ETF (ARKK-US). According to Katie Stockton, founder of Fiailead Strategies, the correlation between the two has been around 60% this year, far better than the 14% between Bitcoin and gold.

“It’s another reminder that bitcoin and altcoins are risk assets, not safe havens.”

Bitcoin’s one-week bias (comparing the cost of put and call options) surged to nearly 15% on Wednesday, well above the 6% average over the past seven days, said Noelle Acheson, head of global trading market insights at Genesis.

"This represents a stronger bearish sentiment, echoing the current jitters around uncertainty in the broader environment."

Mike Novogratz, CEO of cryptocurrency-loving Galaxy Digital, tweeted on Thursday that as long as the stock market continues to fall, cryptocurrencies will not be able to get out of the sell-off state, and investors should not want to buy on the dip.

"It's hard for cryptocurrencies to rise until the stock market bottoms."

He recently warned that as long as interest rates rise, cryptocurrencies and the Nasdaq will come under pressure.