Bitcoin Slices Through Key $40K Support, Following Bubble Stocks And Bonds Down

Bitcoin Slices Through Key $40K Support, Following Bubble Stocks And Bonds Down

Bitcoin support

Photo: shevtsovy / iStock, https://www.istockphoto.com/portfolio/shevtsovy?mediatype=photography

Bitcoin dipped below its key $40,000 support level as U.S. inflation rose to a 41-year high, pushing yields on bonds higher and tracking bubble stocks that have been sliding in recent weeks.

The Bitcoin price dropped 7 percent to $39,785.68 on April 11, falling below the $40,000 mark for the first time since March 16, according to Coin Metric. Bitcoin was trading at $39,817.34 as of this writing.

The 10-year Treasury yield rose to a three-year high of 2.78 percent – a level last seen in 1981, according to data released by the U.S. Bureau of Labor Statistics, as U.S. inflation came in at 8.5 percent.

Riskier assets tend to fall when yields rise. Markets are expecting that the U.S. Federal Reserve will resort to tightening monetary policy by hiking interest rates to rein in the runaway inflation.

U.S. bubble stocks that have little-to-no profits but saw a boom in business amid the pandemic have crashed more than 80 percent from their record highs, trading below their pre-pandemic levels.

The Nasdaq Composite index—a proxy for the U.S.-listed technology sector—is firmly in correction territory — the sixth-worst start to a year, according to strategists at LPL Financial — and the prospect of higher interest rates and tighter monetary policy could make it even tougher.

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Bitcoin’s steady pullback was triggered on March 28 after buyers failed to push the price above the $48,000 resistance level, CoinDesk reported.

However, analysts are saying the largest cryptocurrency is not yet oversold, although its support could be shifting to $37,500.

Listen to GHOGH with Jamarlin Martin | Episode 74: Jamarlin Martin Jamarlin returns for a new season of the GHOGH podcast to discuss Bitcoin, bubbles, and Biden. He talks about the risk factors for Bitcoin as an investment asset including origin risk, speculative market structure, regulatory, and environment. Are broader financial markets in a massive speculative bubble?

“Bitcoin and traditional markets have continued to respond negatively to expectations that the U.S. Fed will tighten its monetary policy to fight inflation, and Tuesday’s CPI release seems to be weighing heavily,” said Riyad Carey, a research analyst at Kaiko, in a CNBC report.

“Globally, the continuing war in Ukraine and increasing shutdowns in China are dragging on markets.”

Investors expect Bitcoin and stocks to rise or hold their ground in the coming days as markets factor in higher inflation.

Photo: shevtsovy / iStock, https://www.istockphoto.com/portfolio/shevtsovy?mediatype=photography