Sheena Shah (Morgan Stanley strategist) reflected on the Bitcoin market and its ongoing decline, which saw it fall below the $30,000 mark once again.

Bitcoin tried to recover earlier today, but was rejected by the bulls at $32,150. Another hot set of inflation numbers has staged an intraday reversal that pushed BTC price lower to $29,011 – a new 11-month low for the world’s largest digital asset.

“Parts of the crypto market that were more popular recently, amidst the bear market, have also been weakening, a sign that leverage is falling and demand is poor. $28k is a technical level to watch for Bitcoin to the downside, as this is where anyone who bought in the past year would incur a loss,” Shah said in a client note.

According to Shah, a strong positive correlation exists between equity market risk sentiments and cryptocurrency. Shah also noted that retail investors don’t seem to be the dominant crypto trader anymore.

“The largest proportion of daily crypto trading volumes is from crypto institutions, much of which comes from them trading with each other. Exchanges, custodians, crypto funds, etc. Around four years ago when Bitcoin was trading below $10k, retail traders dominated. We think the increased involvement of institutions, which are sensitive to availability of capital and therefore interest rates, has contributed in part to the high correlation between Bitcoin and equities,” she added.

Finally, Shah also doesn’t expect the increased volatility to fall “any time soon.”

“When Bitcoin falls, most other cryptocurrencies also fall, highlighting very little differentiation by investors.”

Bitcoin prices are down 3.5% as of 09:22 EST

By Senad Karaahmetovic