The cryptocurrency market faced another day of downward pressure as uncertainty in traditional markets continues to spread following the recent rise in interest rates on the 10-year US Treasury bond.
Data from Cointelegraph Markets and TradingView show that the price of Bitcoin (BTC) fell to a low of $ 44,710 in the last hours of February 25 before a wave of buying at key support helped the digital asset to recover above $ 46,500, but overall, analysts expect $ 50,000 to turn into established support before expecting a continuation to the upside.
Despite significant BTC purchases by MicroStrategy, Tesla, and MassMutual, the majority of Institutional investors still have security and tax treatment concerns preventing them from investing in Bitcoin, according to Galaxy Digital co-chair Damien Vanderwilt.
Institutional investment has been a major source of optimism in the cryptocurrency sector in 2021, but its influence in helping BTC reach a market capitalization of USD 1 trillion may be overstated, as a recent analysis shows that stablecoin whales and retail traders still have the highest purchasing power.
Rising interest rate puts pressure on GBTC
On February 25, the interest rate on the 10-year US Treasury bond shot up to 1.52%, its highest level in more than a year.
According Chad Steinglass, CrossTower Trade Director, the move created market-wide pressure that pushed “GBTC’s premium as low as -6% and closed around -2% today.” The analyst sees interest rate volatility as a major source of volatility for the broader market, as the long end of the curve steepens as the US dollar is pushed lower.
Cryptocurrencies came under more pressure after equity markets deteriorated throughout the day, possibly due to a “fight for liquidity” resulting from traders “pushing against margin calls and the need to free up money”.
“I interpret the collapse of the GBTC premium as a sign that retailers are turning their positions towards free liquidity, or large shareholders like ARKW are seeing exits, causing them to sell GBTC along with everything else.”
Traditional markets are still choppy
The 10-year Treasury yield fell .0582 basis points to hit 1.46 on February 26, marking a 3.82% decline from its peak the day before. This led to a rough day in the markets that saw the major indices close with mixed results.
The NASDAQ ended the day up 0.56%, recovering some of its losses from the 3.5% drop on February 25. In the meantime, the S&P 500 and DOW ended the day in the red, down 0.48% and 1.51% respectively.
Most of the major cryptocurrencies also suffered heavy losses on Friday, With the exception of Cardano (ADA), which became the third largest cryptocurrency by market capitalization after its price soared to a new all-time high of $ 1.29. The current excitement for the altcoin appears to be tied to the upcoming ‘Mary’ mainnet launch scheduled for March 1.
Basic Attention Token (BAT) has also battled the market sell-off to record a 6.43% gain after the ad February 23rd of the next Brave Decentralized Exchange.
Ether (ETH) price is down 7.19% and is trading below $ 1,500, while Binance Coin (BNB) is down 8.36% to trade at $ 224.14
The total cryptocurrency market capitalization is currently $ 1.533 trillion and Bitcoin’s dominance rate is 61.3%.