2. Leverage becomes more expensive with higher rates.

3. The same crowd owns both assets (e.g. Bitcoin and Tesla)

4. Qs are low yield assets with high projected future cashflows. Low rates bring those cash flows to the present, high rates discount them more aggressively. Bitcoin has 0 cash flow, so the effect is worse.

Bitcoin proponents have no financial education. Bitcoin is not a hedge for anything (including inflation). Crypto is a high beta asset with an inelastic supply which makes it even more volatile in periods when everyone wants/needs to liquidate simultaneously.

Organisations borrowed fiat cash to keep the crypto show going. This all started to unravel when borrowing costs went up. Many crypto businesses used their coins as collateral for loans, as the market collapses their counterparties force liquidation which forces the price downward which forces even more liquidation. And now we are learning how much leverage went into crypto. It's like the GFC except that (1) it seems [mostly] contained in the crypto world and (2) there will be no government backstop.

https://twitter.com/hodlKRYPTONITE/status/153760293205275852...

Wrt to QQQ this is a combination of inreased borrowing costs makes the ongoing game of share buy-backs more expensive; the increased in treasury yield increases the discount rate which reduces the net present value of future cashflows which reduces valuation; increased inflation greatly reduces value of money in the future; and we are very likely going to enter a recession which will reduce earnings and growth.

There are gold critics like Warren Buffet who've argued that gold investing is pointless because, to paraphrase him, "You pay people to dig it out of the ground and refine it and then you pay more people to guard it and let it sit there." Despite critics like Buffet, gold has held its value and often goes up during a downturn. So I can see how Bitcoin proponents might draw the parallels between the two, including the same sort of critics, and thus reasoned if gold works as a hedge then Bitcoin might as well.

There are also some overlap between gold people and Bitcoin proponents, especially in the early days of Bitcoins. My friends who were interested in Bitcoins in the early days were the same types who would buy gold as a store of value. Maybe it's from this early origin that the idea was passed down.

With hindsight it's pretty easy to see that's false, since the common tie is the same investors investing in both asset classes, with dollars they get from economic performance and monetary and fiscal policy.

Now the music has stopped and people are scrambling for the exits.

Large miners didn't sell the coins and borrowed real money to fund their new mining operations.

Since the rates are going up, they have no choice but to sell.

And that is not to mention the poor folks who borrowed money to buy bitcoins.

As far as I can tell, even gold tends to go down in the early stages of recessions as people use its liquidity to cover losses elsewhere.

When NASDAQ sneezes, bitcoin catches COVID. The sort of tech stock buyer who also gets a bit of crypto will tend to be easily squeezed (because they are the sort of person who buys crypto). So when there's a stock market dip, do they sell their stocks? No, they sell the frivolous crap first.

So NASDAQ goes down 3%, bitcoin goes down 10%.

Mostly though, bitcoin is unregulated, illiquid and tiny. So the main force on the market is internal shenanigans - not outside forces at all. There's a paper to this effect (which I can't find right now), showing that BTC and ETH hardly respond to outside events.

When there's no fundamental to support a price, it just moves on the whim of risk on/risk off