After Bitcoin briefly fell below $29,730 on May 9, traders across asset classes were relieved to see it rise again on May 10. However, there were still a lot of similarities between the crypto market and traditional financial markets in terms of how prices moved.
Due to variables such as lightly traded assets and poor liquidity, altcoins tend to suffer greater losses during market downturns but also enjoy greater gains when the market recovers.
Several projects had double-digit gains on May 10, including Maker (MKR), the protocol that makes the DAI stablecoin. This is likely because Terra and its TerraUSD (UST) stablecoin had a bad day, which hurt TerraUSD (UST). After Binance Labs said it was making a strategic investment in the liquid staking platform, the prices of a number of other cryptocurrencies went up by a lot.
After Binance Labs said it was making a strategic investment in the liquid staking platform, the prices of a number of other cryptocurrencies went up by a lot. These included the Persistence (XPRT) cryptocurrency and its liquid staking token, pSTAKE (PSTAKE). Polygon also recovered, rising by 14.59 percent.
Despite the widely held idea that the crypto market will operate as a hedge to TradFi volatility, the link between Bitcoin and the stock market has remained high in 2022.
In fact, the price action of the Dow Jones Industrial Average on May 10 shows that the volatility that is usually associated with the cryptocurrency market has started to show up in traditional markets, as the index rose by more than 500 points before giving back some of those gains by the time this article was written.
The Nasdaq and S&P 500 have fared a little better, notching gains of 0.9% and 1.92%, respectively.