The price of Bitcoin (BTC) recovered by more than 8% overnight on March 1 following a steep drop during the weekend.
There are three reasons the price of Bitcoin recovered swiftly over the past 24 hours. They include the recovering global stock market, rising Coinbase premium and a typical weekend reversal.
Rising global stock market coincides with weekend reversal
The global stock market started to recover as soon as the market opened on Monday.
The stock market slumped during the past week due to the rising Treasury yield curve. As the bond market rallied, risk-on assets, such as stocks, saw a pullback.
Holger Zschaepitz said the global risk markets started the week strongly as bond yields eased. He said:
“Global risk mkts start the week on the front foot as bonds rally. Australia’s 10y yield fell 25bps, German 10y drops 3bps ahead of inflation data. US 10y steady at 1.41%. Following last week’s bloodbath, easing in bond yields is big relief. Gold gains to $1757. #Bitcoin at $46.8k.”
Although Bitcoin is considered a safe-haven asset and a store of value, it often moves in tandem with the risk-on market.
This trend occurs because the market capitalization of Bitcoin is still hovering at around $1 trillion. Bitcoin’s valuation is relatively small compared with other safe-haven assets like gold. Hence, there is a higher probability that it would be more affected by macro factors, at least in the short term.
Analysts at Santiment explained:
“The relationship between the price of #Bitcoin and traditional stocks remains higher than the historical norm. As we’ve noted in previous data studies, $BTC’s rallies tend to be the most prominent when this correlation turns negative, as it did in December, 2020.”