Cryptocurrency prices like those of Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) have been incredibly volatile this week, although that is nothing too new.
Unfortunately for crypto investors, volatile in this case means they have fallen in value, and substantially so. At the start of this week, you could exchange one Bitcoin for just under US$21,000. Today, that same coin is going for around US$17,000. That’s a drop close to 20%. Ouch.
It’s been even worse for the second-largest cryptocurrency by market capitalisation, Ethereum. Ethereum has fallen from around US$1,550 at the start of the week to the US$1,232 it is commanding today, a fall of more than 21%.
These falls can probably be attributed to the disaster of the global cryptocurrency exchange FTX. As my Fool colleague Bernd dug into this week, FTX is, or at least was, one of the largest exchanges in the world. But after a liquidity crisis, FTX is now in deep trouble and could be facing collapse.
All of this roiled crypto markets and sent Bitcoin to its lowest price in two years. But could this affect the share market?
Has Bitcoin’s woes affected ASX shares this week?
After all, many cryptocurrency investors also invest in shares, and vice versa. So investors might be wondering how this massive volatility in the crypto markets could affect their ASX shareholdings.
We’re used to hearing arguments in favour of investing in cryptocurrencies that involve the supposed lack of correlation these markets have with other assets like shares. After all, many investors still call Bitcoin ‘digital gold’.
Well, what happens in cryptocurrency markets can certainly affect shares that are involved in the crypto markets. Fellow crypto exchange Coinbase Global Inc (NASDAQ: COIN) shares have lost more than 15% over the past five trading days. And the ASX-listed BetaShares Crypto Innovators ETF (ASX: CRYP) has lost more than 20%.
But apart from these crypto-linked companies, the markets overall seem unfazed. Over those same five days, the NASDAQ-100 (NASDAQ: NDX) has risen by a very healthy 6.4% or so. The S&P/ASX 200 Index (ASX: XJO) is up 3.85%, while the American benchmark S&P 500 Index (SP: .INX) has gained over 5%. Even gold is up big.
So it seems that, at least this time, volatility in the cryptocurrency markets has not even touched our share portfolios.
