Digital currencies traded lower early Friday in New York, unable to capitalize on solid gains earlier in the week.
The price of the No. 1 digital currency, bitcoin BTCUSD, -2.22% has fallen 2.4% this morning, trading at $6,614.64, slightly off its overnight low of $6,513.10.
The slide in bitcoin, which makes up 45.2% of the total market cap of cryptocurrencies, has pushed the overall value of the market below $250 billion, just about $7 billion away from making a 5-month low (see chart below from CoinMarketCap.com):
Correlation or not?
As global equity markets continue to whip around in volatile fashion, strategists continue to debate whether there is any correlation between stocks and virtual currencies, which are meant to be a noncorrelated asset. Meaning its moves don’t coincide with any other financial asset.
Steve Barrow, currency and fixed-income analyst at Standard Bank, in a Friday said unconventional monetary policy after the financial crisis that pushed interest rates to record lows have seen the two move more in lockstep.
“There’s a second, more cerebral explanation. This is that Bitcoin and cryptocurrencies are not just another speculative play thing; they reflect a backlash against the debasing of money that’s been undertaken by fiat-based monetary authorities in the large nations/regions such as the US, Japan, UK and euro zone,” Barrow wrote.
He said as rates normalize, the recent move lower in digital currency prices could accelerate.
“In this sense we might just see the Bitcoin implosion as a reflection of the impending decline in global liquidity that kicked off with US rate hikes and balance sheet normalization.”
Read: A ‘seismic shift’ is taking place in the cryptocurrency sector, analyst says
Other markets
That said, bitcoin has seen upbeat trade early Friday while stocks appear to be under pressure. Ether, which runs on the Ethereum network, has lost 3.4%, trading at $370.61, Bitcoin cash is the worst performer, down 5.1% at $6.13.64, Litecoin is off 3.6% at $115.16 and Ripple’s XRP coin is back below 50 cents, last trading at 47 cents.
Futures have followed the spot market lower. The Cboe’s April contract XBTJ8, -2.51% is down 2.4% at $6,610 and the CME Group Inc. April contract BTCJ8, -2.66% last traded at $6,615, down 2.1%.