After the stock market crash, why are cryptocurrency prices also falling?
Mark Connors: Bitcoin's price drop indicates market tension, not weakness
Bitcoin, the largest cryptocurrency by market capitalization, fell 5% to trade at around $79,000.
Ethereum, the second-largest cryptocurrency, recorded a sharp decline of 12.3%, reaching its lowest level since October 2023, indicating the depth of the pressures affecting the digital asset market.
Warning for Traditional Markets
Mark Connors, chief investment strategist at Risk Dimensions, sees no reason to panic. Rather, he views the decline as a warning to traditional markets, not a threat to cryptocurrencies themselves.
Connors told Asharq Al-Awsat that "Bitcoin's outperformance since the beginning of the month is historic," highlighting its 2.2% gain in April, even as US stocks fell 9.6% and global stocks slumped 8.2%.
He justified this decline as an "early indication" that stock markets in Tokyo—and perhaps Europe and the United States—will continue the sell-off seen last week. He considered the tariffs announced by Trump not just market noise, but a "macroeconomic signal."
Japanese stock markets aren't the only ones that could face pressure. Chinese investors are bracing for a gloomy Monday as the country's markets return to trading after a long weekend, amid China's retaliation against US tariffs.
China's US-listed stock index fell 8.9% on Friday, the largest drop since October 2022, amid turmoil sweeping global markets after Beijing announced a 34% tariff on all US imports. This occurred during a holiday for financial markets in China and Hong Kong, which will resume trading on Monday.
Decentralized Asset Favor
With gold recording its best quarterly performance since 1986 and Bitcoin outperforming over one-, three-, and five-year periods, Connors believes we are witnessing a deeper structural shift in market psychology, favoring decentralized, inflation-resistant assets over traditional stocks.
"Bitcoin and gold have already been chosen as safe havens. This will accelerate in Q2, though not consistently," Connors asserted.
According to his analysis, Bitcoin, along with gold, is outperforming all major asset classes "not in a bull market, but in the midst of a global slowdown." He points to structural shifts caused by geopolitical shocks, particularly across-the-board tariffs, as the real catalyst behind these movements.
Connors wrote in a note that the inflationary shock from Trump's tariffs will force central banks—including the Federal Reserve—to return to quantitative easing, a move that will further support alternative assets.