What’s really behind the crypto crash

‘Market turmoil’ looks set as the theme of the week, so let’s take a close look at a trading arena more prone to mayhem than most. Why has bitcoin lost half its value since November?

First, I could make a case that since crypto investment has become at least a small part of many mainstream portfolios, its prices tend to respond to the same signals that influence conventional share indices — rather than following fantasy flight paths of their own. So just as FTSE and Nasdaq investors are seriously rattled by the prospect of war in Ukraine on top of existing fears about interest-rate rises and tighter money, so crypto fans are also naturally nervous.

And when tech fanciers become sellers of stocks such as Netflix and Peloton (the maker of digitally connected exercise bikes), which led a sell-off of former ‘lockdown winners’ at the end of last week, so bitcoin holders — likely in many cases to be the very same people — are cashing out too.