It's been a bloodbath in the crypto market of late. For the past two weeks, crypto investors have seen impressive selling pressure, taking the likes of top tokens such as Cardano (ADA 1.29%), Solana (SOL 3.54%), and Chainlink (LINK -1.91%) lower on a near-daily basis.
However, these three top tokens have seen some buying pressure today, increasing 1.1%, 1.3%, and 0.5%, respectively, over the past 24 hours as of 3:30 p.m. ET. Interestingly, at the day's highs this morning, these three tokens actually accelerated 6.9%, 7.5%, and 7.3%, respectively, since yesterday.
Today's volatility in the crypto market has once again followed the price action seen in equity markets. All the major indexes have surged higher, with the Nasdaq leading the way with 2.76% gains at today's close over yesterday.
Notably, recent reports have suggested that the correlation between cryptocurrencies and tech stocks has reached its highest level ever. Thus, the moves we're seeing in some of the largest cryptocurrencies appear to be mirroring the movements in the largest tech stocks to a great degree.
The whole argument behind cryptocurrencies representing an alternative asset class to equities and bonds appears to be falling apart. The market is now viewing digital assets much in the same what as tech stocks, for better or worse.
Given the tech sell-off we've seen of late, this has certainly been to the detriment of crypto investors. That said, on days when tech is rallying, these sorts of upside moves are possible. Thus, cryptocurrencies such as Cardano, Solana, and Chainlink are seemingly being viewed by investors as a higher-beta way to play already risky tech growth.
I can understand the reason why the market is increasingly pricing cryptocurrencies and tech stocks in tandem. After all, the blockchain technology crypto tokens support is, in and of itself, a nascent high-growth technology. There's plenty of upside for such tokens in times of accommodative monetary policy. However, with the punch bowl being taken away by the Federal Reserve, the future growth path for many digital assets is more uncertain than it's been in a long time.
It should be noted as well that Cardano, Solana, and Chainlink investors have never been through a recessionary environment. With a greater recession risk being priced into all markets right now, it's unclear what that means for these top tokens. Many investors appear to be taking the view that it's better to wait on the sidelines than "HODL" right now.