The value of bitcoin fell under the $40,000 mark in early morning trading today.
The popular cryptocurrency sold off sharply this morning, while rival tokens like ether also lost value. Currently worth $39,831 per coin, bitcoin is off 4.3% and ether 5.1%, according to Coinbase data.
While it is always risky to cover price changes in the crypto world, the fall in the value of bitcoin has crossed the threshold from notable to material. Yahoo Finance indicates that bitcoin’s recent all-time high saw the cryptocurrency trade as high as $68,789.62 per coin. Today’s price puts bitcoin’s current drawdown at just over 42%.
That’s twice the swing required for bitcoin to have entered a technical bear market, and four times what it would need to meet the requirements of a correction.
But price declines in the value of certain cryptocurrencies are not slowing the decentralized world. Crypto-focused publication The Block noted this morning that NFT trading volumes at the popular OpenSea marketplace are strong to start the year. So, web3 activity appears strong by some measures, despite recent price declines; whether today’s selloff will have an impact on NFT trading activity, to stick with that particular example, is not yet clear.
For other crypto market participants, the selloff could harm near-term results. There is a historical, positive connection between rising crypto prices and trading volumes. Companies like Coinbase and others make their daily bread off trading fees, meaning that falling crypto prices are generally bearish for their financial performance. Of course, the past is not a perfect predictor of the future, but today’s selloff is not precisely bullish.
Cryptos are not the only volatile asset that is trading lower this morning: Tech stocks as a whole are off 1.81% (Nasdaq Composite), while software stocks are off an even more painful 2.62% (WisdomTree Cloud Computing Fund).