Bitcoin increasingly behaves like another tech stock

Unlike the idealists who drove the initial enthusiasm for Bitcoin in the 2010s, these professional traders are treating cryptocurrency as part of a larger portfolio of high-risk, high-yielding technology investments. Some of them are under pressure to secure short-term returns for customers and are less ideologically committed to Bitcoin’s long-term potential. And when they lose faith in the tech sector in general, it affects their Bitcoin exchanges.

“Five years ago, the people who were in the cryptocurrency industry were crypto people,” said Mike Boroughs, one of the founders of the blockchain investment fund Fortis Digital. “Now there are guys who are in the full range of risk activities. So when they get hit over there, it has an impact on their psychology. “

Concerns in the stock market, influenced by difficult economic trends, including the Russian invasion of Ukraine and historic inflation levels, were particularly evident in the decline in tech stocks this year. Meta, the company formerly known as Facebook, is down more than 40% this year. Netflix has lost 70 percent of its value.

Shares of cryptocurrency exchange Coinbase also plummeted by more than 10% on Tuesday after being reported. declining revenue and a loss of $ 430 million in the first quarter. Shares in the company have fallen more than 75% overall this year.

The Nasdaq is already inside bear market territory, after closing last week down 26% from the mid-November record. Last November was also the time when Bitcoin’s price peaked at nearly $ 70,000. The incident was a reality check for bitcoin evangelists.

“There was this undeniable retail belief that Bitcoin at the end of last year was a hedge against inflation – it was a safe haven, it would replace the dollar,” said Ed Moya, a cryptocurrency analyst at trading company OANDA. “And what happened is that inflation started to get very bad and Bitcoin lost half of its value.”

The prices of other cryptocurrencies have also been squeezed. The price of Ether, the second most valuable cryptocurrency, has dropped about 25% since the beginning of April alone, to less than $ 2,300. Others, such as Solana and Cardano, also suffered sharp drops this year.