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Bitcoin’s Bullish Rally Comes to an End as Bond Yields Surge and Risk Assets Experience Global Sell-Off

After hitting a high of $58,300 over the weekend, things have turned for the worse as Bitcoin (BTC) has plunged by more than 20% this week. This pullback is the worst weekly slip for the leading cryptocurrency since March 2020. 

Risk assets experiencing a global selloff

A strengthening dollar is not good news for Bitcoin because the two have an inverse relation, as shown by analysts. For instance, as BTC surged by more than 295% in late 2020, the US Dollar Index (DXY) slipped to a 32-month low. 

These sentiments are echoed by Vijay Ayyar, the head of Luno’s Asia Pacific region. He noted:

“The dollar is strengthening, which is a good indication to expect a slide in Bitcoin and crypto.”

Ayyar also pointed out that risk assets were taking a hit as they were experiencing a global sell-off. It is the reason why stocks and cryptocurrencies were sliding. He said:

“The rough patch for Bitcoin comes amid wider chaos in global markets, as a surge in bond yields heralds growing expectations that growth and inflation are moving higher and forcing traders to reevaluate their positions across multiple asset classes.”

Mining rigs mine the Ethereum and Zilliqa cryptocurrencies at the Evobits crypto farm in Cluj-Napoca, Romania, on Wednesday, Jan. 22, 2021. The world’s second-most-valuable cryptocurrency, Ethereum, rallied 75% this year, outpacing its larger rival Bitcoin. Photographer: Akos Stiller/Bloomberg

The fight past $50,000 continues

Crypto trader Carl Martin recently disclosed that $50,000 might be the new resistance level, which the leading cryptocurrency has to fight, and this may take some time. The leading cryptocurrency is trading at $46,330 at the time of writing, according to CoinMarketCap.

This price plunge has made Bitcoin shed its value from its recent high of more than $1 trillion to $865 billion at press time. 

Historically, Bitcoin goes through multiple steep corrections in a bull run. Between 2016 to 2017, it experienced six of them. For instance, on Nov 13, 2017, BTC hit a low of $5,844 then hit $20,000 thirty-four days later. Time will tell how the current BTC correction will turn out.

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