Bitcoin’s Stimulus-Led Rise Fades as Stocks Drop, Dollar Gains
Bitcoin has erased Sunday’s gains as stock markets struggle to cheer progress on U.S. fiscal stimulus efforts.
The cryptocurrency is changing hands just over $50,150 at press time, representing a 1.55% drop on the day, according to CoinDesk 20 data. Prices had jumped from roughly $49,000 to $51,800 on Sunday as the U.S. Senate approved President Joe Biden’s $1.9 trillion stimulus plan. The bill now heads back to the House of Representatives so it can be reconciled with the House-passed version and then sent on to President Biden to sign.
Traditional markets had mixed reactions early today, with the U.S. dollar falling against major fiat currencies and Asian stocks and U.S. stock futures initially charting moderate gains. However, with the U.S. 10-year bond yield remaining near 12-month highs reached Friday, the dollar soon regained ground, pushing the Asian equities and bitcoin lower.
The 10-year yield is currently trading just shy of Friday’s high of 1.62%. S&P 500 futures are now nursing losses and futures tied to the tech-heavy Nasdaq index are down nearly 2%.
Movement on stimulus was expected to put upward pressure on yields, and cap progress for risk assets. Hence, bitcoin’s failure to establish a foothold near $52,000 doesn’t come as a surprise.
The cryptocurrency has faced rejection near $52,000 three times this month, making it a level to beat for the bulls. The breakout, however, may remain elusive if yields continue to rise, diluting bitcoin’s appeal as an inflation hedge.
Additionally, developments in the Chinese stock market could be a key driver of bitcoin’s price action, trader and analyst Alex Kruger told CoinDesk over Telegram.
The Shanghai Composite Index fell by over 2% today, while the FTSE China A50 index declined by nearly 4%. The former is down 14% from its February peak, while the S&P 500 is down less than 5% from the record high reached in mid-February.
Although the exact reason for the big drop in Chinese stocks is not known, it could be a harbinger of things to come amid rising fears of an early unwinding of stimulus by the Federal Reserve. According to Gary Biddle, professor of financial accounting at the University of Melbourne, the stock market is collapsing after a last-gasp bull run.
“With monetary easing set to end, it’s a game of chicken as investors see how close they can come to timing the inevitable downturn,” Biddle said in an article for South China Morning Post.
It remains to be seen if the Chinese stock market ends up dragging its global peers and bitcoin lower. The cryptocurrency’s options market data shows some investors are beginning to position for a deeper drawdown. “Puts are being bought today,” Swiss-based data analytics platform Laevitas told CoinDesk.
So far today, more than 300 daily expiry (bearish) put option contracts have been bought at $50,000 and $48,000 strikes on Deribit, the world’s largest crypto options exchange by trading volume and open positions.
According to data provided by Skew, the one-week put-call skew, which measures the value of puts relative to calls, is hovering above zero, indicating increased demand for short-term puts.
While the one-, three- and six-month skews are still negative, reflecting a bullish bias, they are considerably higher than earlier this year.
Recommended News
-
Bitcoin Price Falls $8K to 3-Week Low, Altcoins Crash
Bitcoin nosedived to three-week lows early Sunday, puncturing the frenzied speculative bubble built into several alternative cryptocurrencies (altcoins) in the wake of Coinbase’s recent debut on Nasdaq. The biggest cryptocurrency by market value dropped from roughly $60,000 to $52,148 in 15 minutes during the Asian session, liquidating almost $4 billion worth of positions in the derivatives market, according to Messari’s Ryan Watkins. While the exact reason for the sudden crash is unknown, the market mood may have soured due to rumors that the U.S. Treasury is planning to charge several financial institutions for money laundering using…
-
Digital currency mining is an inevitable trend in the next five years, CoinFans Mining analysis, mining is getting easier and easier
In 2021 marks the first year of institutionalized mining, which brings both benefits and challenges. CoinFans Mining’s analysis shows that the institutionalization of digital currency mining is an inevitable trend in the next five years, mining will become easier and easier, and everyone will be able to mine, and the mining industry will become an industry. Few investments offer the upside with venture capital-style upside and the downside with infrastructure-style downside case. Combining energy arbitrage with hoarding bitcoin onto a company’s balance sheet can make this happen. Which is why…
-
1 million Chaingers, let the world hear your voice!
The total locked-in value of decentralised finance is now a staggering 310 billion and the market keeps on growing as more and more investors are starting to shift towards DeFi; which is great news because the blockchain industry can’t possibly grow without the support of its world wide users, and at the same time, traffic is the main thing that will keep projects going in the long run. As the DeFi industry continues to evolve, Chainge, a coded financial platform customised for both institutional and individual investors, is in full swing…
-
Bitfury’s Deep Ploughing on Blockchain Mining · Coinbasis Plan Launched
Australian Bitcoin mining hardware giant Bitfury is set to expand its industry into distributed storage. FlashFX, AgriDigital and Othera will also jointly deploy the distributed storage ecological field, create the establishment and trading of distributed storage financial derivatives, and create super servers with the world’s top three server manufacturers. With the massive growth of global data. Privacy security and access speed have become the most critical issues in data storage. Bitfury and his partners plan to develop a decentralized distributed storage, data sharding and data encryption platform without downtime. Through…
-
Mysterious Filings Suggest Impostor Is Using Grayscale’s Name to Pump Obscure Coins
Someone appears to have gone to odd lengths to impersonate digital asset manager Grayscale Investments, possibly in an effort to drive up the prices of two lesser-known cryptocurrencies. To be clear: Grayscale said it has no intention of creating a financial instrument around Nahmii, an Ethereum scaling project, or Theta, a video platform. Nevertheless, there is a pair of registered trusts, one for each obscure coin, in the state of Delaware (the trust for Nahmii misspells the coin’s name with one “i”). Each of these trusts bears Grayscale’s name, and…
-
NBA Top Shot Firm Dapper Labs Raising Funds at $7.5B+ Valuation: Report
Just a few weeks after after raising funds at a reported $2.6 billion valuation, Dapper Labs, responsible for the high-flying digital collectibles platform NBA Top Shot, is raising more money but is now being valued at more than $7.5 billion , according to The Information. Citing a person with direct knowledge of the talks, the report said the new round is being led by Coatue Management, which led the previous round. Coatue is led by billionaire investor Philippe Laffont. Three-year old Dapper’s value is exploding along with the demand for non-fungible tokens…
-
McLaren Partners With Turkish Crypto Firm to Launch Formula 1 Fan Token
McLaren, the legendary Formula 1 auto racing team, has entered into a long-term partnership with Turkish crypto firm Bitci.com to create an official fan token for the team. The U.K.-based McLaren will launch its fan token – which it says is the first of its kind in Formula 1 racing – through the new partnership. Bitci.com will also become an official partner of the racing team, according to Wednesday’s announcement. Bitci.com is a Turkish cryptocurrency exchange with around $50 million in 24-hour traded volume. McLaren joins other prominent sports teams that have launched fan tokens….
-
Gold farming studios’ new favorite: Savior!
Studio: Orchha Guest: Jaipur (Orchha’s partner) Could you tell us what this studio is? Jaipur: Orchha is a game society focused on the metaverse ecosystem. It helps investors pool assets and bet on NFT games to make profits and share them with the community of supporters. The current focus of Orchha is gaming NFTs. It offers hardware and software technical support and is a pioneer in in-game earnings. It was established in India and will incorporate North American and Eastern European communities the team members come from. Why was this…
-
Market Wrap: ‘Elon Candle’ Effect Fades Quickly as Bitcoin Retreats Below $55K
Bitcoin (BTC) trading around $54,771.18 as of 20:00 UTC (4 p.m. ET). Slipping 0.63% over the previous 24 hours. Bitcoin’s 24-hour range: $53,577.33-$57,225.30 (CoinDesk 20) BTC trades below its 10-hour and 50-hour averages on the hourly chart, a bearish signal for market technicians. Bitcoin trading on Coinbase.Source: TradingView The “Elon Candle” effect on bitcoin appears to be short-lived. The market jumped early Wednesday after Tesla CEO Elon Musk announced the electric vehicle maker plans to now accept bitcoin as a payment option, and that it won’t convert any receipts of the cryptocurrency back into…
-
Rep. Gaetz of Blockchain Caucus Faces Investigation for Sexual Misconduct: Report
U.S. lawmaker Matt Gaetz (R-Fla.), a member of the Congressional Blockchain Caucus who has put his name to a handful of pro-blockchain bills and letters, is under investigation by the Department of Justice, which is looking into whether he had a sexual relationship with a minor, the New York Times reported Tuesday. According to the report, which cited “three people briefed on the matter,” Gaetz is also being investigated over whether or not he violated federal sex trafficking laws. He allegedly may have paid for a 17-year-old to travel with him. The investigation is part…
