The cryptocurrency market faced another day of downward pressure as the unease in traditional markets continued to spread following the recent rise in interest rates on 10-year US Treasuries.
Data from Cointelegraph Markets and TradingView shows the price of Bitcoin (BTC) fell to a low of $ 44,710 on late February 25, before buying back on key support to help the digital asset get back above $ 46,500 to recover. In general, however, analysts look to become an established support after $ 50,000 before a bullish continuation is expected.
BTC / USDT 4-hour chart. Source: TradingView
According to Damien Vanderwilt, co-president of Galaxy Digital, despite major BTC purchases from MicroStrategy, Tesla and MassMutual, the majority of institutional investors still have concerns about the security and tax treatment that prevents them from investing in Bitcoin.
Institutional investing was a major source of optimism in the cryptocurrency sector in 2021, but its impact on BTC’s $ 1 trillion market cap may be overvalued as recent analysis shows stable coinage whales and retailers still have the greatest purchasing power .
Interest rate hike puts pressure on GBTC
On February 25, the 10-year Treasury Treasury rate rose to 1.52%, its highest level in over a year.
According to Chad Steinglass, Head of Trading at CrossTower, this move resulted in market-wide pressure that “brought the GBTC premium down to minus 6% and closed today by minus 2%”. The analyst views interest rate volatility as the main cause of market volatility as the long end of the curve steepens as the US dollar is pushed down.
Daily market performance in cryptocurrencies. Source: Coin360
Cryptocurrencies came under increasing pressure as the equity markets deteriorated during the day, possibly due to a “liquidity problem” that stemmed from traders “pushing margin calls and freeing up cash.”
Stone glass said:
“I interpret the collapse in GBTC premiums as a sign that either retailers are foregoing free liquidity or large fund owners like ARKW are seeing outflows causing them to sell GBTC along with everything else.”
The traditional markets are still restless
The 10-year government bond yield fell 0.0582 basis points to 1.46 on February 26, a 3.82% decrease from the previous day’s high. This resulted in a troubled day in the markets with major indices mixed closely.
The NASDAQ ended the day up 0.56% and made up some of its losses from the 3.5% decline on February 25th. Meanwhile, the S&P 500 and DOW ended the day down 0.48% and 1.51%, respectively.
Much of the top cryptocurrencies also saw heavy losses on Friday, with the exception of Cardano (ADA), which became the third largest cryptocurrency by market capitalization after its price hit a new all-time high of $ 1.29. The current excitement for the altcoin appears to be linked to the upcoming launch of the ‘Mary’ mainnet, slated for March 1st.
ADA / USDT 4 hour chart. Source: TradingView
Basic Attention Token (BAT) has also resisted the market sell-off, posting a 6.43% gain following the announcement of the upcoming Brave Decentralized Exchange (DEX) on February 23.
The price of Ether (ETH) is down 7.19% and is below $ 1,500, while Binance Coin (BNB) is down 8.36% to $ 224.14
The market cap for cryptocurrencies is now at $ 1.533 trillion, and the dominance rate of Bitcoin is 61.3%.