The price of bitcoin fell below $40,000 on Friday as the world’s largest cryptocurrency has lost 40% of its peak value since November. Stocks have also fallen with cryptocurrencies, demonstrating a relationship between the two investments.

The correlation rate between stocks and cryptocurrencies is at its highest rate since September 2020. The decline in bitcoin coincided with a 20% fall in Netflix shares as the streaming service is anticipating a lower subscriber count than normal this month. The selloff could prompt investors to liquidate their crypto holdings to limit their losses.

"Cryptocurrencies are no longer an isolated risk asset and are responding to changes in global policy,” Clara Medalie, research director at Kaiko, told The Wall Street Journal. “It’s not surprising that both will start to become more volatile as the liquidity taps turn off.”

Another reason why cryptocurrencies have been falling as of late is due to Russia and China cracking down on cryptocurrency mining because of stability concerns and the high amount of energy it requires which harms the environment. Russia accounts for 10% of global bitcoin mining, making it a major hub for the market.

“Potential financial stability risks associated with cryptocurrencies are much higher for emerging markets, including in Russia,” the nation's central bank said.

Financial regulators have intended to crack down on the volatile market due to its lack of consumer protections causing the value of crypto to dip amid rising interest rates.

Ethereum has fallen 12% and is trading below $3,000.

“More rate hikes is generally going to cause more pain for risk-on assets, and bitcoin especially,” said Chris Matta, president of 3iQ Digital Assets US.

The crypto market has lost $200 billion in market value over the past 24 hours. The current price of bitcoin is $38,281.30.