Bitcoin suffers liquidation spree, fearing ominous signs for market

"Bitcoin is viewed as a key risk-taking (risk-on)/risk-averse (risk-off) asset, so if the price of bitcoin stays low, especially if it continues to move lower, then last week will be a major red warning sign for other risk assets."

Matthew Tuttle, chief executive officer of Tuttle Capital Management LLC, agrees. He noted that cryptocurrency bulls tend to think of bitcoin as an inflation hedge, but it's really more of a risk asset.

In an interview, Tuttle said.

"A sell-off in that asset is not a good thing for the stock market because they are correlated from a risk-taking/risk-aversion perspective. While the stock market closed relatively stable on Friday, the broad-based sell-off in bitcoin was detrimental to overall sentiment."

The sell-off trend needs to get reversed

Over the past week, traders' nerves have continued to be rattled and companies at high levels have been hit hard.