Your Survival Guy is no fan of cryptos especially with actors like Matt Damon cashing in where you invest, but they win. Now the price of bitcoin has dropped below $40,000 as it becomes increasingly correlated to the performance of tech stocks. The Wall Street Journal’s Caitlin Ostroff reports:
It is becoming a more common occurrence: When stocks fall, so does bitcoin.
Bitcoin, the world’s largest cryptocurrency by market value, fell below $38,000 Friday to its lowest dollar value since August 2021, according to CoinDesk. It later regained some ground and was trading at $38,705.70, down 6.5% from its level late Thursday and more than 40% from its record in November 2021.
The drop came fast on the heels of a late-afternoon swoon in the stock market on Thursday.
Cryptocurrencies and stocks have fallen together since the start of the year, responding to investor worries about how a series of expected Federal Reserve interest-rate increases will ripple through markets.
“Cryptocurrencies are no longer an isolated risk asset and are responding to changes in global policy,” said Clara Medalie, research director at Kaiko. “It’s not surprising that both will start to become more volatile as the liquidity taps turn off.”
One measure of how bitcoin has become more entwined with markets: The cryptocurrency is near its highest correlation with the stock market since September 2020, according to Kaiko, a cryptocurrency market data provider. That means when the stock market goes down, so does bitcoin.
Action Line: While bitcoin is looking less like the “digital gold” it’s been sold as, and more like a high-beta tech play, Americans need to refocus on what they’re holding in their portfolios. You should always have bonds in your portfolio. If you think you need help, I would love to talk with you. If you’re serious about taking the right steps to prepare your family for financial success, but you can’t find the time or motivation to do it, I can help. Click here to sign up for my free monthly Survive & Thrive newsletter, and I’ll help you beat the inertia holding you back from achieving your goals. But only if you’re serious.
E.J. Smith - Your Survival Guy
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