Grayscale On Selling Spree As Bitcoin Correlation To Equities Market Deepens

Grayscale gigantic Bitcoin trust is falling at a rate faster than the recent drop in the price of the leading cryptocurrency. Grayscale Bitcoin trust has plunged roughly 20% in less than a week compared to a 13% dip in BTC. On the other hand, the cryptocurrency correlation with the equity market is hitting new levels. With the equities market on a downward spiral, Bitcoin may continue with the dip to $38,000.

Grayscale Bitcoin Trust sinking premium

Grayscale has for a long time maintained a huge premium on the underlying asset but currently sits at 0.7%. As the premium disappears, investors who had a high-risk appetite during the bull ran seem to be disembarking from the boat.

Simultaneously, investors could be selling in panic and may rejoin once stability returns. It is worth keeping in mind that the bellwether cryptocurrency plummeted from $58,000 to $45,000 in less than 48 hours this week. This is a huge drop considering the consistency BTC has had over the last several weeks. According to the CEO of Grayscale Investments, Michael Sonnenshein, the disappearing premium is:

 "Certainly a risk, no question about it, but ultimately price discovery in GBTC every day is driven entirely by market forces."

Bitcoin growing correlation with the equities market

The crypto-to-equities market correlation is high at the moment. Additionally, this correlation has been lock-step in the last year, with Bitcoin standing out. The equity market allows investors to trade company shares on either regulated exchanges or over-the-counter markets.

A comprehensive look at these markets reveals losses across the board, especially for the futures market. Most of the leading futures are in the red, led by S&P 500 VIX, Small Cap 2000, Dow Jones and Nasdaq. If Bitcoin follows these stocks, we could see a drop to either $42,000 or $38,000.

(Click on image to enlarge)

The equities market chart

Bitcoin uptrend remains undented

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