Terra’s LUNA Leads Slide in Majors as Ether Nears $3K

Crypto markets slid 2.6% in the past 24 hours amid renewed global recession fears, data shows. Stocks in Europe and Asia inched lower, while reports of potential global supply chain disruptions further gripped markets as China’s renewed lockdowns extended to another week.

In Asia, Hong Kong’s Hang Seng Index ended the day 3% lower, while Shanghai Composite took a 2.61% loss. Over in Europe, Germany’s DAX slid 0.31% and the pan-European stock index Stoxx 600 lost 0.20%. Traders started to price in bearish movement in the US as pre-market futures for Nasdaq dropped 0.67%, while the S&P 500 fell 0.31%.

Bearish sentiment in global markets spread to crypto markets. Terra’s LUNA, Avalanche’s AVAX, and ether (ETH) saw the biggest declines in the past 24 hours outside of bitcoin (BTC) in the top 10 cryptocurrencies by market capitalization. In European morning hours, ether dropped to just over a major support level at $3,000, losing which could see the asset slide further to the $2,700 mark.

LUNA fell 8% even as Luna Foundation Guard (LFG) added $173 million in bitcoin to its wallet over the weekend, bringing its total holdings to 40,000 bitcoin, as reported. The LFG is a newly formed nonprofit that aims to maintain the Terra ecosystem by building a $10 billion reserve in bitcoin for backing the UST, a stablecoin issued by Terra, one of LFG’s main backers.

LUNA dropped to a previous support level at $85 nearly a week after setting lifetime highs of $120, price charts show. Losing current levels could see it drop further down to the $70 mark, where the next major support exists.

Crypto market capitalization fell to just over $2 trillion, dropping some $260 billion since last week’s $2.27 trillion figure. Bitcoin fell to $41,300 in European morning hours, a 10% decline since last week’s $48,100 mark, a three-month high.

Rising correlation with stocks

Some analysts said recent price action proved the crypto market’s correlation with stocks was rising.

“The crypto market is again increasing its correlation with the dynamics of stocks, or rather, it is guided by the high-tech Nasdaq index,” explained Alex Kuptsikevich, financial analyst at FxPro, in an email to CoinDesk. “This relationship is easily explained by the fact that in both cases, investors are betting on a progressive idea.”

Metrics from earlier this month showed bitcoin ended the first quarter of 2022 trading at a correlation of 0.9 with S&P, where 1 suggests perfect correlation and -1 is perfectly inverted. The 90-day correlation between bitcoin and S&P previously set a 17-month high in March.