The price of Bitcoin (BTC) is struggling to break past $51,000 on March 8 as the U.S. Treasury yield is rising again while the U.S. Dollar Index (DXY) is at the highest levels in over three months.
The global stock market, including equities in the U.S. and Asia, have pulled back in tandem as the Senate’s stimulus approval sparked inflation fears.
Why is Bitcoin dropping off of inflation fears
As Welt market analyst, Holger Zschaepitz, explained, the bond market turned into turmoil as the 10-year U.S. Treasury yield surged to 1.6% after the stimulus news broke.
The instability in the bond market naturally led to a sell-off of risk-on assets, affecting both stocks and cryptocurrencies. The analyst wrote:
“Bond turmoil continues w/US 10y yields jump to almost 1.6% as the $1.9tn US fiscal package alongside robust Chinese trade data fuel inflation fears.”
Stocks and Bitcoin have seen a tightening correlation in recent weeks likely due to the increasingl unfavorable macro landscape.
Peter Brandt, a long-time futures and FX trader, said he saw many correlations throughout his career. However, he said that correlations can also come to an end “dramatically.”
Hence, in the foreseeable future, Bitcoin could move in tandem with stocks as the markets react negatively to the rising Treasury yield. But on longer time frames, the bull run of Bitcoin could strengthen and gain momentum if the correlation begins to weaken. He said:
“Through my 46 yrs. trading I have seen MANY sacred correlations come and go Gold v. Yen or USD or stocks Silver vs. Gold Interest rates v. stocks or Gold BTC v. whatever Et al When these correlations come to an end, they often end dramatically Study each market with its own chart.”
Nevertheless, March may turn out to be a slow month for BTC trading with low volatility.
Is a bigger drop coming?
If the traditional market drops, traders seemingly anticipate a broader Bitcoin pullback in the near term.
For example, pseudonymous cryptocurrency trader Loma said a short-term drop to $48,000, an important support level, cannot be ruled out if the legacy markets continue to show weakness. He wrote:
“Base still forming, I’m liking how everything is playing out. Only concerns are temporary legacy market correlations so if we dump tomorrow, I’d anticipate a re-visit the lows or at least the EQ at ~$48k. Still taking it easy on trading, focusing more on $BTC and $ETH.”
This week, the key for Bitcoin is whether the DXY sees a pullback after a week-long rally, providing the risk-on market some room for a relief rally.
As Cointelegraph previously reported, the Treasury yield is also approaching a key resistance area, and if it gets rejected, Bitcoin could regain momentum in the near term to rally above the next big resistance areas at $52,000 and $53,000.
Billionaire Mark Cuban Identifies Altcoin With ‘Most Upside’ As Bitcoin Blasts Above $60,000
As Bitcoin shoots above $60,000, business magnate Mark Cuban says one altcoin stands above the rest in terms of investment potential.
In a new interview with CNBC Make It, the billionaire says that Ethereum (ETH) is the best crypto prospect on the market.
“As an investment, I think Ethereum has the most upside.”
Cuban, who previously stated that smart contracts on Ethereum’s blockchain have revolutionized the cryptocurrency market, believes that the second-largest crypto by market cap is the digital asset which most resembles legal tender.
“I wish I had bought [Ethereum] sooner. I think it’s the closest thing we have to a true currency.”
Cuban went on to reiterate his position that Bitcoin (BTC) is superior to gold because not only is its supply scarce, but it’s easier to transfer, store, trade, and fractionalize. That sentiment is shared by fellow billionaire CEO Chamath Palihapitiya of Social Capital and Virgin Galactic.
Cuban’s comments come on the heels of him saying that customers prefer making payments in Dogecoin (DOGE) rather than BTC at his venues because Bitcoin tends to be a highly appreciable asset.
Ethereum is exchanging hands at $3,839 at time of writing, an 11% increase from its seven-day low of $3,431, according to CoinGecko.
ProShares Set for Bitcoin Futures ETF Launch on Monday After Apparent SEC Approval
The US Securities and Exchange Commission has reportedly greenlit the country’s first Bitcoin futures exchange-traded fund (ETF).
ProShares, an ETF provider, filed a post-effective amendment prospectus on Friday that states the company plans to launch the BTC Futures ETF on Monday, a sign that the SEC has approved the product.
The fund doesn’t invest directly in Bitcoin, but it provides price exposure to Bitcoin futures contracts, a first in the US.
Both Bloomberg and CNBC, citing people “familiar with the matter,” reported earlier in the week that the SEC planned to approve BTC futures ETFs from ProShares and the independent investment firm Invesco Ltd.
Invesco’s ETF is also set to provide exposure to a collection of exchange-traded products (ETPs) and private investment trusts that hold Bitcoin, rather than direct investments in BTC itself.
Last month, SEC Chairman Gary Gensler said he was open to ETFs for Bitcoin futures, noting that they are filed under mutual fund guidelines which provide “significant investor protections.”
Bitcoin is trading at $61,549.38 at time of writing and is up 6.6% in the past day and more than 40% in the past two weeks, according to CoinGecko.
BTC hit its all-time high of $64,804.72 in mid-April.
Bitcoin May See Real Peak If ETF Is Approved and I May Cash Out Half My ETH: CNBC’s Jim Cramer
Jim Cramer shares a common view that Bitcoin has the opportunity to reach a short-term peak or even a real peak if Bitcoin ETFs are approved next week.
Host of CNBC’s Mad Money, Jim Cramer, has talked to Andrew Sorkin from CNBC’s Squawk Box show about the prospects of the Bitcoin price if or when four Bitcoin futures ETFs get the SEC’s approval next week.
Cramer also stated that he may cash out half of his Ethereum stash.
SEC approval for ETF may push Bitcoin up, Cramer says
Answering Sorkin’s question, Cramer stated that a lot of people believe there is a high chance that the senior cryptocurrency, Bitcoin, may hit a short-term or even a real price peak if four BTC-based ETFs are approved by the SEC next week.
He corrected the host and said that the regulatory agency may approve not just one but four Bitcoin futures ETFs next week.
However, he stated that people are running ahead of a possible ETF approval.
"There's a possibility a lot of people feel that you can get a short-term peak, or maybe a real peak as people just run ahead of the ETFs," says @jimcramer on a #Bitcoin ETF approval. "I might cash out half my $ETH." pic.twitter.com/48MJP047yK— Squawk Box (@SquawkCNBC) October 15, 2021
Bitcoin spikes to $59,500 as chance for ETF approval emerges
Earlier today, the flagship digital currency, Bitcoin, soared to a multi-month high of $59,500 on the Bitstamp exchange. It happened after Bloomberg released a report, saying that so far the Securities and Exchange Commission has not objected to approving multiple Bitcoin futures ETFs that were submitted to it earlier this year.
The Bloomberg article stated that the information had been confirmed by multiple sources close to the SEC and to the matter in question.
The media giant’s ETF analyst, Eric Balchunas, believes that the likelihood of Bitcoin ETFs getting the green light has now risen to more than 90%. Still, he is not ready to “close the case” yet.