Bitcoin's plunge exposes idea of uncorrelated asset as 'big lie'

A selloff in cryptocurrencies resumed Monday, with Bitcoin dropping back below US$30,000 with global equity markets remaining under pressure.

The largest cryptocurrency fell as much as 6.2 per cent and was trading at US$29,835 as of 4:54 p.m. in New York. Other tokens including Ether and Avalanche were on the back foot too. U.S. equities fell as investors assessed the latest signs of economic malaise from the U.S. and China.

Overall, however, digital-asset markets were still calmer compared with the worst of last week’s turmoil over the collapse of the TerraUSD, UST, stablecoin. Deus Finance’s DEI token lost its peg to the dollar on Monday, though it only had a market value of about US$63.5 million, compared with about US$18 billion for UST. 

“I think it will continue to trade with the equity market and risk assets,” said David Donabedian, chief investment officer of CIBC Private Wealth Management. “That’s the big lie that’s been exposed, the idea that it’s some new asset class that’s going to help diversify your portfolio has been blown to smithereens.”