The current market scenario is such that there are noticeable differences between different asset classes every other week. The potential influence of macro-trends on Bitcoin, for instance, was covered last week, with Bitcoin exhibiting resistance to rising U.S-10 year bond yields, unlike other equities and commodities.
However, over the past few days, a more cohesive development can be observed across the landscape, with Bitcoin appearing to come across as more correlated.
Present understanding between Bitcoin and Bond Yields
Now, according to a recent dataset from Ecoinometrics, every asset has been up over the past week. In fact, U.S 10-year yields went up by more than 5%, while Bitcoin toppled the market with a new ATH above $60,000 before strong corrections eventually swept in.
Source: Ecoinometrics
Further, after 3 weeks of decline for Gold and NASDAQ, both asset classes registered a bit of positive correction as well, while the S&P 500 went up by ~3%, as illustrated by the chart above.
In comparison, the U.S 10-year yields have continued to climb, with the Federal Reserve still silent since it hasn’t taken any steps to curb rising interest rates.
Is Bitcoin even reactive to it anymore?
Between both weeks’ performances, the fact that Bitcoin has remained oblivious to any serious changes in the macro-landscape suggests that adoption from the institutional side is making rising interest rates irrelevant at the moment.
Additionally, any intervention from the Federal Reserve on the yield curve control would only help Bitcoin improve its credentials as a store of value since more capital will be moving in its direction.
The only condition that may legitimately disrupt Bitcoin’s rally is a liquidity crisis on the same scale as the one seen in March 2020. Therefore, on paper, it will take a massive market crash for Bitcoin to take a plunge on the charts.
Retail investors likely to invest more in BTC in March
Further, according to a recent survey by Voyager Digital, 80% of all retail investors are likely to buy more Bitcoin in March. AMBCrypto got in touch with Steve Ehrlich, CEO and Founder of Voyager Digital, and asked him about the recent enthusiasm associated with Bitcoin, in spite of the declining U.S Dollar.
Ehrlich argued that the latest stimulus bill inflating the monetary supply is making Bitcoin extremely lucrative due to its finite circulation. Speaking on the subject of volatility and potential corrections, he added,
“As adoption grows and the markets mature, with more institutional money entering crypto-assets, the sort of wild swings we saw historically should soften.”
While Bitcoin did correct itself by 10% over the past 24-36 hours, the world’s largest cryptocurrency was still trading above $54k at press time. Ergo, the general sentiment over the long-term will continue to sustain itself, with the same diverging in a different direction from the rest of the market.
Historically, March has been a critical month for Bitcoin, one shaping the year forward. Sustaining a positive RoI in the next 2 weeks will give BTC a positive March for only the 3rd time in 12 years, something that may be the headstart for yet another rally.