On Thursday, February 25, the U.S. markets plunged with Dow Jones (INDEXDJX: .DJI) tanking over 500 points in a single day. The surge in the U.S. bond yield to 1.6% has created havoc in the global markets along with the fears of inflation forcing traders to reevaluate their position across different asset classes.
The ripple effect of the stock market has ultimately come to the crypto market with Bitcoin (BTC) taking over 7% in another major weekly sell-off. At press time, Bitcoin (BTC) is down 7.13% slipping all the way down to $47,100 with a market cap of $880 billion.
After weeks of strong bull run, Bitcoin has corrected over 20% on the weekly charts from its all-time high above $58,300. The broader cryptocurrency market looks under pressure and has corrected over 5% as of writing this story. Ethereum (ETH) and all other altcoins are down in the range between 8-10%. Speaking to Bloomberg, Vijay Ayyar, head of Asia Pacific for cryptocurrency exchange Luno in Singapore said:
“Risk-on assets are taking a hit at the moment — we’re seeing stocks slide and crypto is following. The dollar is strengthening, which is a good indication to expect a slide in Bitcoin and crypto.”
While Bitcoin (BTC) has been always touted as a “digital gold”, it is highly volatile in comparison to the physical yellow metal. Bitcoin (BTC) is down over 20% on weekly charts but spot Gold is down under 1%holding at $1,768 per ounce.
Biggest Bitcoin fund Sinks to A Discount
The biggest Bitcoin fund – Grayscale Bitcoin Trust (GBTC) – has plunged 20% this week. Once trading at a massive premium, it looks like traders have cashed-out the gains fleeing from the trades. The GBTC shares (OTCMKTS: GBTC) are down more than 20% on the 5-day chart and currently trading at $45.64 USD.
As per data by Bloomberg Intelligence, the vanishing GBTC premium shows that investors are willing to cash-out as BTC hits new highs. Eric Balchunas, BI’s senior ETF analyst said: “This is panic or profit-taking selling. It’s almost like the price of GBTC is an amplified version of Bitcoin price.”
Speaking at the Bloomberg Crypto Summit on Thursday, Michael Sonnenshein – CEO of Grayscale – said:
“It’s certainly a risk, no question about it, but ultimately price discovery in GBTC every day is driven entirely by market forces”.