Bitcoin Could Plunge Further as Market Turmoil Triggers Heightened Volatility in the Crypto Space

The ongoing turmoil in the Japanese and United States stock markets has triggered heightened volatility in the crypto space. This highlights the

Recent market movements in Japan and the United States have had a palpable impact on the crypto space, highlighting the interconnectedness of global markets and Bitcoin's growing correlation with traditional finance (TradFi) markets.

In its latest Alpha report, a team of analysts from crypto exchange Bitfinex highlighted how Bitcoin's rising correlation with TradFi markets could see the digital asset continue to experience downward momentum if stock market declines persist.

Bitcoin Could See Further Plunge as Japanese, U.S. Stock Markets Continue to Fall

Broader market instability, influenced by economic and political developments, saw the Japanese stock market index Topix record its largest two-day decline since the 2011 tsunami. The index fell 9.2% over the last two trading days, beginning with a 6.1% plunge on Friday.

According to Bitfinex, the downturn was sparked by the Bank of Japan's surprise rate hike on Wednesday and Governor Kazuo Ueda's hawkish comments, causing one of the world's best-performing markets to experience a sharp correction.

Similarly, Wall Street sell-offs began on Friday, with U.S. equities and Treasury yields hitting multi-month lows following a dismal jobs report, concerns about the Federal Reserve delaying interest rate cuts, and fears of an economic slowdown. The S&P 500 has now closed three consecutive weeks in the red for the fourth time since the 2022 bear market lows. According to the analysts, the peak-to-trough decline amounted to approximately 6.5%.

“Since BTC and the SPX have experienced positive correlation since mid-July, we expect the oscillating nature of the correlation to play out and the correlation across risk assets to increase moving forward,” the report noted. “However, if the stock market continues to be plagued by downside, it is increasingly likely that BTC might continue to face downward pressures in such a scenario.”

Some Altcoins May Not Survive as Crypto Market Faces Heavy Losses

As Bitcoin hovered around its lowest price since mid-February and faced further risk of a decline, the Bitfinex analysts observed that altcoins were bearing the brunt of the market sell-off.

Altcoins experienced significant declines, with Solana (SOL) leading the跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势跌势

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