Bitcoin (BTC) slid back below $40,000 on Monday, extending its losses from the past few days as concerns about rising interest rates weighed on the market.
The apex cryptocurrency has been trading in a range between $37,500 and $48,000 for the past few weeks, and the recent sell-off pushed it closer to the lower end of that range.
While some investors remain bullish on Bitcoin‘s long-term prospects, the recent weakness in the market underscores the concern that rising interest rates could hamper Bitcoin’s recovery from last years crash.
According to Arthur Hayes, the former CEO and co-founder of crypto exchange BitMEX, Bitcoin could drop in the short term to as low as $30,000, given its strong correlation with the Nasdaq 100 Index (NDX).
Hayes, who said he expects the index to experience a significant 30% to 50% drawdown, called the crypto-equity correlation an “inconvenient truth.”
“As long as the 10-day correlation stays high, we must stay defensive on our crypto positioning,” Hayes wrote in his latest Medium post.
Bitcoin is currently in the midst of a pullback, after bulls failed to break through the critical $48,000 resistance level. The cryptocurrency was trading above $40.200 at press time and is down more than 2% over the past 24 hours.
In an interview with MarketWatch, Charlie Erith, chief executive at crypto investment advisor ByteTree, said that there is “not likely to be a giant collapse” in the short term, as long as BTC trades above the $38,000 level.
Lower support levels at $37,500 and $40,000 are seen as downtrend stabilizer. Erith noted however, that “it would be quite bearish” if the $38k level gets broken.
It‘s worth noting that Bitcoin and other cryptocurrencies have shown remarkable resilience in the face of headwinds, and Monday’s sell-off below the $40k psychological mark may simply be a blip on the radar.
Hayes, did in fact ended his blog post by saying that of course, his “market prognosis might be wrong.”