To recap my previous post, Bitcoin hit a new all-time high price last weekend of over $58,000, however, it has fallen below $50,000 or more than 13% so far this week. The largest Bitcoin fund, Grayscale Bitcoin Trust (GBTC) has suffered more than the currency itself, losing over 20%. The fund closed below the value of its underlying asset for the first time in almost three years.
Bitcoin/USD and Grayscale Bitcoin Trust (GBCT) 3-year chart
Stocks tumbled this week as investors attempt to calculate the potential impact of rising interest rates. The 10-year Treasury yield has moved to the highest level in a year closing Thursday at 1.47%. Stock investors are worried the rise in bond yields may indicate the economy is heating up and inflation is coming. Federal Reserve Chairman Jerome Powell has denied the idea that higher inflation is coming and that the current signs of it are transitory. With stock prices at elevated levels, increased yields may cause investors to continue taking profits.
10-year Treasury Bond (GT10 Govt) 12 months chart
With optimism elevated surrounding a strong economic rebound, the tech stocks that led the market higher during lockdown have begun to suffer. The Nasdaq 100 fell the most since October as investors are looking forward for companies that stand to benefit the most post pandemic. In addition, Tesla has fallen to $685 per share, a level last seen before its inclusion in the S&P 500 Index. Cathie Wood’s Innovation ETF continues its decline this week as Tesla is one of the largest holdings.
Tesla Inc. (TSLA) 12 months chart
Nasdaq Composite Index (CCMP Index) 12 months chart
On another note, commodity prices continue rising across the board. One of the recent winners is copper, having risen to an eight-year high. As mentioned in a previous post, commodities have been used in the past as a hedge against inflation and investors appear to be piling in as an alternative to high-priced stocks.
Generic Copper Future (HG1 Comdty) 12 months chart
