Recession fears are mounting as a 20% drop in the S&P 500 sends stocks into a bear market and increases the likelihood of BTC and altcoins hitting new lows.

Whoever coined the phrase “Sell in May and go away” had a brilliant insight, and the dynamics of the cryptocurrency and stock markets over the past three weeks have shown that this phrase is still true.

A wholesale sell-off across all asset classes occurred on May 20, leaving traders with little opportunity to escape the carnage as fears of inflation and rising interest rates continue to dominate the headlines.

Data from Cointelegraph Markets Pro and TradingView shows that the price of Bitcoin (BTC) is falling below $29,000, with traders worried that a loss to that level will see a $20,000 low hit next week.

1-day BTC/USDT chart. Source: Trading View
As reported by Cointelegraph, some analysts are warning that BTC could potentially drop to $22,700 after the death cross based on its historical price movement.

Further evidence of traders’ muted expectations is the put/call ratio for open interest in BTC, which hit a 12-month high of 0.72 on May 18, according to research firm Delphi Digital.

Bitcoin put/call ratio by open interest and volume. Source: Delphi Digital
Delphi Digital said:

“A high put/call ratio suggests that investors are speculating about whether bitcoin will sell further, or it could mean that investors are hedging their portfolios against a down move.”
Stocks enter bear market territory
May 20 brought even more pain to traditional markets as the S&P 500 fell another 1.62%, more than 20% below its all-time high in January 2022, further fueling recession fears. If the index manages to end the day 20% below its all-time high, that would officially put the underlying index into a bear market.

Dynamics of the main indices on May 20. Source: Yahoo Finance
The Nasdaq Composite and the Dow also suffered significant losses amid widespread weakness, with the Nasdaq losing 275 points to shed 2.42%, while the Dow shed 362 points to shed 1.28%.

See also: Cryptocurrency veterans help newbies in a bear market

What is bad for BTC is even worse for altcoins

Daily dynamics of the cryptocurrency market. Source: Coin360
Altcoins were also heavily sold off as BTC, Ether (ETH) and equities fell, negating gains recorded earlier in the day.

A few bright spots were Ellipsis (EPS), Persistence (XPRT) and 0x (ZRX), which were up 30%, 13.92% and 12.34%, respectively.

The total market capitalization of cryptocurrencies currently stands at $1.234 trillion, with a Bitcoin dominance rate of 44.6%.

Source: CoinTelegraph