Bitcoin dropped 15% in 24 hours today, falling below $40,000 for the first time since March 15. Meanwhile, Ethereum dipped 14%, finding itself beneath the $3,000 mark for the first time since March 23.
It's part of a larger trend, with crypto markets tumbling 8.5% in the span of 24 hours to hit a market cap of $1.84 trillion, according to CoinMarketCap.
If you're looking for plausible answers as to why, it's worth checking out the equities markets. The S&P 500, an index of 500 top publicly traded companies in the U.S., closed down 1.7%, the Dow Jones Industrial Average ended Monday 1.2% lower, and the tech-heavy Nasdaq lost a full 2.2% of its value.
Bitcoin, which is historically fairly correlated to other cryptocurrency prices is, of late, increasingly correlated with stock prices. In March, BTC's price correlation with the S&P 500 hit 0.49, with -1 meaning they move exactly opposite and 1 meaning they move in perfect tandem. It was the highest rate since October 2020, per Arcane Research.
But what's going on with stock prices?
Take your pick. There's the ongoing Russian war in Ukraine, a new round of COVID lockdowns in China, and, of course, the Federal Reserve's decision to aggressively raise interest rates and choke off the supply of money into the economy.
The Nasdaq was already down nearly 4% from Monday through Friday last week. The weekend hasn't made things much better. With less money pumping into the economy as the Fed seeks to fight inflation, crypto market caps very well may deflate, according to BitMEX founder Arthur Hayes. The billionaire investment banker-turned crypto entrepreneur wrote on Sunday of a "coming crypto carnage" and predicted that both Bitcoin and Ether had much further to fall.
"Bitcoin and Ether will bottom well before the Fed acts and U-turns its policy from tight to loose," he wrote. He predicted they will test the $30,000 and $2,500 thresholds before the end of June.
Hayes previously predicted, when the price of BTC was below $5,000, that it would reach $10,000 in 2019. That turned out to be prescient, as the price rallied to above $12,000. A year earlier, he suggested that BTC could hit $50,000 that year and would bottom out at between $3,000 and $5,000. While he was way off on the former, the latter prediction was correct.
Bitcoin bulls are hoping Hayes' most recent prediction is wrong. But a look at today's price movements indicates he could be on to something.