Bitcoin prices dropped by more than 8% today, approaching the $9,000 level as digital currency markets suffered widespread losses.
The world’s most prominent cryptocurrency fell to as little as $9,108.47 close to 1 p.m. EDT, CoinDesk figures show.
At this price, it had declined more than 8.5% in less than 24 hours, after rising to $9,962.18 the night before, additional CoinDesk data reveals.
The largest digital currency by market capitalization was not alone, as at the time of this writing, all of the top 10 cryptocurrencies were in the red, with 9 in 10 being down at least 5%, according to CoinMarketCap.
Digital currencies were not the only asset class to record losses today, as stocks experienced notable declines.
The S&P 500 index, for example, dropped nearly 6% today, Google Finance data showed.
There was a massive decline “in the equity markets today, with large cap U.S. stock indices plunging more than 5-6%,” said John Todaro, director of digital currency research for TradeBlock.
“There was a general flight to cash today, with even gold ETFs trading down. Bitcoin and other cryptocurrencies were not immune to the sell-off and in a heightened correlation between assets, nearly everything traded lower,” he noted.
Other analysts provided similar perspectives, with Avi Felman, head of trading at BlockTower Capital, stating that:
“The recent sharp drop in the equity markets is rattling investors who have watched Bitcoin struggle to break 10,000 even in a risk on market.”
“Now that equity markets are suggesting there may be continued downside, digital asset investors are reminded of the last time equity markets fell out (which coincided with a large bitcoin drawdown) and are selling out of fear about a potential resumption of the equity bear market,” he claimed.
Denis Vinokourov, head of research for London-based digital asset firm Bequant, also spoke to the widespread declines, attributing them to bearish forecasts for the job market and the recent dovish comments made by the Federal Reserve.
Because of these factors, “stocks fell across the board and it appears that crypto markets are once again not immune when it comes to cash crunches and margin calls.”
“The move is likely exacerbated by already bearish market positioning seen in the options market,” he said.
Hugo Renaudin, CEO and co-founder of LGO, summed these comments up nicely, stating that “cash is still king, and when the uncertainty on future prospects rise, investors favor cash over ‘risky’ assets.”
“This happens across any market from equity to bitcoin: when markets go down, correlation goes to one.”
While the aforementioned analysts primarily focused on factors like a decline in equities and a flight to cash helping fuel losses in bitcoin, analyst Marouane Garçon spoke to technical factors.
“This tends to be the norm whenever Bitcoin gets close to $10,000,” he stated.
“It’s a very strong resistance. I was expecting this.”
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether and EOS.