Why Bitcoin, Ethereum, and Dogecoin are slumping today

High correlation to equity markets is back, with the price action for major cryptos closely tracking major indices.

| More on:
A worried man holds his head and look at his computer.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

After initially surging more than 4% early this morning during Asian trading hours, top cryptocurrencies Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO: ETH), and Dogecoin (CRYPTO: DOGE) have each moved lower in early afternoon trading. As of 1 p.m. ET, these three tokens have slumped 1.5%, 2%, and 2.2%, respectively, over the past 24 hours.

Interestingly, the moves for these top tokens tracked the price action for global equity markets quite closely. Most major Asian indices moved higher overnight. However, U.S. equity markets have moved lower today as investors await the release of the most recent Federal Open Market Committee (FOMC) meeting minutes. Concerns around the forward hiking schedule of the Fed saw bond yields shoot higher today, affecting all risk assets, including major cryptocurrencies.

So what

Investors across all risk assets appear to be remaining cautious right now given uncertainty tied to the steps the Federal Reserve intends to take to bring down inflation. With bond yields moving to such a wild degree this year, investors have had a difficult time anticipating when a shift toward more accommodative monetary policy might come about.

For cryptocurrencies, it's clear that the very dovish monetary policy mandate from the Fed following the pandemic provided the fuel for an incredible bull market rally through the end of 2021. Accordingly, given the decline in higher-risk asset classes following a very hawkish shift, investors looking for the next surge in cheap money-fueled speculation await some additional clarity from the Federal Reserve as to how the central bank is thinking about the issues at hand.

Now what

In general, since the onset of the pandemic, the crypto market has traded in a relatively high correlation to equity markets. In fact, as of May this year, the crypto sector's correlation to equities hit its highest level ever. Accordingly, how stocks perform matters a great deal for the higher-beta (higher-volatility) performance of this higher-risk asset class.

Today's price action across both equity and crypto markets will certainly be interesting to watch. Investors might get a sneak peek into how these assets will perform through the end of the year, depending on the commentary provided this afternoon.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Should you invest $1,000 in Bitcoin.ℏ right now?

Before you buy Bitcoin.ℏ shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Bitcoin.ℏ wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Chris MacDonald has positions in Ethereum. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin and Ethereum. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on International Stock News

Electric vehicle such as Tesla being charged at charging station.
International Stock News

Tesla searches for Musk successor: Why this matters

Could Elon get the chainsaw from his own board?

Read more »

customers inside and outside a Microsoft retail store
International Stock News

Microsoft shares earnings report: What's the verdict?

Investors moved the Microsoft share price significantly.

Read more »

Warren Buffett
International Stock News

Countdown to Berkshire's AGM: What do investors expect to hear from Warren Buffett this year?

All eyes will be on Omaha, Nebraska this weekend.

Read more »

A smiling woman holds a Facebook like sign above her head.
International Stock News

Meta surges on blockbuster earnings report

It's a good day to be a Meta investor.

Read more »

A family sits on their couch, eyes glued to the television.
International Stock News

Can Netflix be a $1 trillion company by 2030?

How much more can it grow its subscription base?

Read more »

A man looking at his laptop and thinking.
International Stock News

Stock-split watch: Is Nvidia next?

It was nearly one year ago that Nvidia last split its stock.

Read more »

A man looking at his laptop and thinking.
International Stock News

Here's why Berkshire Hathaway stock is a buy before May 2

Giving Buffett and his team your cash to invest for you is likely to be a solid choice no matter…

Read more »

Robot dab indicating a rocketing ASX share price
International Stock News

For Tesla shares, the future rests on autonomous driving and robotics

Tesla has been under pressure lately, with EV demand dwindling.

Read more »