Bitcoin (BTC) resumed its current slump on Monday, briefly plunging below $40,000 and tracking global stock market falls. Investors have reduced their commitment to volatile investments such as shares and cryptos, citing concerns over inflation and poor economic development. Furthermore, on Monday, the 10-year Treasury yield reached a three-year high of 2.78%, reducing the current value of high-priced IT equities.

Gold, a traditional safe haven, soared on Monday, while the CBOE Volatility Index (VIX), a measure of the stock market’s expectation of instability based on market index options, climbed beyond 20, repeating what happened in early February. Investors are likely to be concerned as a result of this.

Traders Are Responding

Bitcoin’s dip below $43,000 over the weekend started a trend of long sell-offs. Long bitcoin traders are being forced out of their holdings as the price goes down, potentially hastening spot market depreciation.

In recent weeks, long liquidations haven’t reached an all-time high, especially when compared to early March. This might lead to greater market pressure unless BTC experiences a more definite downswing with high trading volume, which normally signifies short sellers’ surrender. However, this has not yet occurred.

Furthermore, despite BTC’s 7% price decline over the weekend, volume remained unchanged. Over the last 30 days, the purchase-to-sale mass flow rate in bitcoin’s perpetual swap market has fallen below one, indicating that traders are disproportionately bearish. This indicates that traders are overwhelmingly pessimistic, implying a prevailing bearish mood.

Stocks Are Also Showing Similar Trends

According to trend monitoring data, the three-month relationship between bitcoin and the software Nasdaq 100 index has hit a peak. Regardless of the fact that this is tiny, the correlation has strengthened since the pandemic-induced trading in risky investments in 2020.

Despite notable exceptions such as The Luna Foundation Guard’s (LFG) 40,000 BTC collection, Bitcoin generally follows stock market trends over the previous year. In a Monday newsletter, FundStrat, a worldwide advisory firm, indicated that macroeconomic uncertainty could outweigh LFG’s stockpile acquisitions. Following earlier LFG acquisitions, we noticed a surge in observed market valuation as other [traders] emulated LFG’s lead,” the company said. However, following this new purchase, the observed market valuation has stayed stable, indicating that there is substantially less willingness to buy during this weekend’s slump.

During market turbulence, investors’ risk budgets appear to have shrunk, which is common. Then again, global turbulence has decreased over the last 15 years of sustained fiscal stimulus.

Altcoin Trading Highlights

Ethereum’s first mainnet shadow fork goes live as the move to Proof-of-Stake (PoS) proceeds: Ethereum’s initial mainnet shadow fork came online today, as the founders of the 2^nd most valuable crypto asset by market value continue to convert the foundation infrastructure to a PoS paradigm.

In this plunge, Terra’s LUNA leads the way: Even though the Luna Foundation Guard (LFG) acquired $173 million in bitcoin towards its wallet over the weekend, giving it a market holding of 40,000 bitcoin, LUNA stock dropped by as much as 8%. The LFG is a newly established charity with the purpose of protecting the Terra ecosystem by creating a $10 billion BTC stockpile to sustain the UST, a stablecoin created by Terra, one of the LFG’s major sponsors.