Bitcoin sinks to $83,000 Friday. Here's why stock-market investors are keeping close watch.
By Barbara Kollmeyer and Joy WiltermuthBitcoin heads for its worst month in three yearsSelling of bitcoin and other cryptocurrencies kept pace early Friday.A selloff for bitcoin and other cryptocurrencies showed no signs of letting up on Friday, and investors were watching closely as a rout in those assets increasingly has been viewed as predictive for where the broader stock market is headed.The price of bitcoin (BTCUSD) was down by about 4% on Friday to about $83,000, after hitting a session low of $80,745 and pushing deeper into April lows. On Thursday, the No. 1 cryptocurrency hit an intraday low of $86,010, the lowest level since April 21, when it fell to $84,633, according to Dow Jones Market Data.Bitcoin is now more than 31% below its all-time high of $126,272, reached on Oct. 6, and is off more than 11% for the year. Down 25% month to date, bitcoin is headed for its worst month since June 2022, when it fell 40.29%, according to Dow Jones Market Data.Losses were seen across the asset class on Friday, with ethereum (ETHUSD) down more than 6%.Crypto has been viewed by the investing world in many different lights over the years. For some, it's a speculative bet that can thrive when money is cheap and abundant. Others see it as a potential alternative to the dollar and other fiat currencies in a world awash in government debt. Still others see some crypto assets as a tool for driving digitalization in payments and finance.However, crypto also has become more highly correlated lately with growth stocks, said Mike Treacy, head market analyst at Apex Fintech Solutions. Both sectors earlier this year benefited when optimism was running high that the Federal Reserve might continue to cut interest rates, but they have been wobbling after Fed Chair Jerome Powell last month said a December rate cut was not a "foregone conclusion.""If growth is going to be financed now by debt, versus free cash flow, then growth stocks become much more riskier," Treacy said. "As such, you see that relationship in crypto markets selling off."Read: Bitcoin just wiped out all of its 2025 gains. What a crypto winter could look like.Bitcoin and other cryptocurrencies stumbled on Thursday as the S&P 500 SPX logged its largest intraday reversal - a 3.5% slump - since April 8, and closed down 1.6% at 6,538.76. The losses were driven by excitement that turned to disappointment over Nvidia (NVDA) earnings in midmorning New York trading."Bitcoin, which sits at the top end of the risk spectrum, extended a losing streak that's been in motion since late October. If people have lost confidence in tech stocks, they certainly won't have the confidence to speculate on cryptocurrency," said Dan Coatsworth, head of markets at AJ Bell, in a note to clients.According to Tom Lee, head of Fundstrat Research, the crypto market is under stress from market makers that provide liquidity for crypto and that were "crippled" by the Oct. 10 selloff. He told CNBC on Thursday that the "drip" lower seen since was being caused by market makers with holes in their balance sheets, forced to sell more crypto if prices fall.In 2022 it took it took six to eight weeks for those market makers to recapitalize, and "we're six weeks this process," he said. "Crypto, bitcoin and Ethereum are in some ways a leading indicator for equities because of that unwind and now that limping and weakened liquidity."Read: Tom Lee says there were five big reasons why markets stumbled. He has familiar advice.-Barbara Kollmeyer -Joy WiltermuthThis content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.