The similarity in price action between crypto and traditional financial markets remains quite strong on May 10 as traders enjoyed a relief bounce across all asset classes following the May 9 rout, which saw bitcoin (BTC) dips briefly to $29,730.
Market downturns typically result in larger losses in altcoins due to a variety of factors, including thinly traded assets and low liquidity, but it also translates into larger rebounds once the recovery is underway.
Several projects posted double-digit gains on May 10, including a 15.75% gain for Maker (MKR), the protocol responsible for delivering DAI (AID) stablecoin, which likely benefited from the fallout of Terra (LUNA) and its stablecoin TerraUSD (UST).
Other notable gainers include Persistence (XPRT) and its pSTAKE (PSTAKE) liquid staking token, which saw gains of 16.4% and 39.8% after Binance Labs disclosed a strategic investment in the platform. liquid staking. Polygon (MATIC) too bounced back with a 14.59% gain.
Correlation with traditional markets remains
Despite the widely held belief that the crypto market acts as a hedge against TradFi volatility, the correlation between Bitcoin and the stock market has remained high in 2022.
On the contrary, the volatility typically associated with the cryptocurrency market has begun to show up in traditional markets, as evidenced by the price action of the Dow Jones Industrial Average on May 10, which Pink over 500 points only to give back at the time of writing.
The Nasdaq and S&P 500 fared somewhat better, posting gains of 0.9% and 1.92%, respectively.
Bitcoin analyst Willy Woo provided further evidence supporting a correlation between crypto markets and traditional markets, who posted the following chart noting that “Fundamentals [are] take a back seat to scare trading.
Willy Woo said,
“What I think is that we don’t trade BTC, we trade macro and stocks. The right pane is the SPX support, which will determine the BTC directionality, the left pane is the equivalent BTC support.
Related: Michael Saylor Calms Investors After Market Crash Hurts $MSTR, $BTC
The S&P 500 could fall much more
As May 10 relief rally sent crypto and stock prices higher, market analyst Caleb Franzen job the following chart warns of a bearish head and shoulders formation on the S&P 500 chart which could result in the loss of another 500 points.
Franzen said,
“Hard to pick downside targets after my $4000 call was hit, but I think the MOST LIKELY support area is down around $3530-$3590. of the white resistance range from September to October 2020.”
The overall cryptocurrency market capitalization now stands at $1.444 billion and Bitcoin’s dominance rate is 41.5%.
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