“The crypto price crash is showing little sign of reversing with Bitcoin still trading below the psychologically important $20,000 mark,” said Susannah Streeter, an analyst at broker Hargreaves Lansdown. “The fortunes of the crypto wild west have followed equity markets closely, and have mirrored the downward trajectory of tech stocks in particular.”

While Bitcoin looks to have stabilized below $20,000 for now, it comes after a bout of volatile trading in which its price spiked to nearly $20,700 from below $18,700 in a matter of about four hours between late Thursday and early Friday. The 10% spike came without a clear catalyst, said Yuya Hasegawa, an analyst at crypto exchange Bitbank.

“The rather irrational rebound was likely caused by some whale(s) to intentionally trigger a short squeeze so that they can sell the coin at higher prices,” Hasegawa said. A “whale” refers to someone who holds a significant amount of Bitcoin and whose actions have the potential to move markets.

Other cryptos, which often take their cues from swings in the price of Bitcoin, exhibited similar trends: Up slightly over the past 24 hours but down from a spike in the early hours of Friday trading.

Ether, the Ethereum network token and second-largest crypto, rose 2% but remained below $1,100, far below its all-time high last November near $4,900. Smaller tokens, called altcoins, exhibited more of the same. Solana gained 4% and Cardano rose 2%. Memecoins behaved similarly, with Dogecoin and Shiba Inu both up 3% but still at depressed levels relative to the last week.

There is an ongoing and severe rout in crypto prices. Bitcoin just capped its worst quarter since 2011, a year in which it breached the $1 mark for the first time, while Ether notched its worst quarter on record. The market capitalization of digital assets has crumbled from nearly $3 trillion just eight months ago to less than $900 billion.

Part of the blame lies in crypto itself. The meltdown of stablecoin Terra, breakdowns in the digital asset lending space, and the bust of a major hedge fund — threatening wider contagion — have all put downward pressure on prices.

“Negative crypto headlines have been nonstop and fresh concerns that the regulatory environment will be rather harsh going forward has really kept sentiment down,” said Edward Moya, an analyst at broker Oanda.

But there’s also the problem of stocks. Bitcoin and its peers should, in theory, trade independently of mainstream finance. In reality, they have shown to be correlated to other risk-sensitive assets, like stocks and especially tech stocks. 

And stocks are in a bear market, with the S&P 500 down more than 20% this year and the tech-heavy Nasdaq 30% in the red. The S&P 500 just finished its worst quarter in more than 50 years.

Driving these declines have largely been fears that the Federal Reserve’s move to continue hiking interest rates against the backdrop of multi-decade high inflation could spur a recession, an environment that would be unkind to risky bets like Bitcoin.

“If the bloodbath on Wall Street remains the theme in the third quarter, Bitcoin could be vulnerable to one more ugly plunge that could have many traders fearing a fall towards the $10,000 area,” Moya said.

Write to Jack Denton at jack.dentondowjones.com