Gold, Stocks, and BTC: Weekly Overview – March 25
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This week’s price movements for BTC (BTC), gold, the S&P 500, in addition to wildcard Grayscale BTC Trust.
BTC
BTC has been struggling this past week. After reaching an all-time high of over $60,000 last weekend, BTC retraced to around $54,000 during the week. However, news from the US Federal Reserve (Fed) on March 17, saw it just back up to the higher 50,000’s. Over the next two days it largely sustained that price level, very briefly touching over $60,000 again. However, by March 20 the price began tumbling down into March 21. The next two days it fell even further to nearly $53,000. On March 24, BTC pushed back up to around $57,000, before massive selling pressure brought it down to nearly $52,000. It is currently trading just about $51,000.
One suggestion regarding BTC’s fall was that more than $5 billion worth of options expire on March 26. The expiry of these contracts and some investors trying to short BTC in the options market “have led to spot-selling pressure into quarter-end,” said Shane Ai, the head of research and development at the crypto exchange Bybit.
GOLD
Gold has had something of a meandering week. After taking a dive, following a boost from Fed news last week, the price of gold traded back up to $1,747 by the end of March 19. The week’s opening days saw it trading between $1,742 and $1,729 before dropping with a large red candle on March 23. Although gold continuously tested support around $1,723, consistent buying pressure kept it above that level. It traded back up a bit the next day before shooting up and dropping back down on March 25.
This latest large boost is also due to news from the Fed. Federal Reserve Chair Jerome Powell suggested a potential rollback of asset purchases in the wake of good economic progress in an interview with NPR.
“As we make substantial further progress toward our goals, we’ll gradually roll back the amount of Treasuries and mortgage-backed securities we’ve bought,” Powell said. “We will very gradually over time, and with great transparency when the economy has all but fully recovered, we will be pulling back the support that we provided during emergency times.”
SPX
The S&P 500 had a bearish week overall. After a similar boost from Fed news last week, the price of SPX took a tumble on March 18, reaching below $3,890. It traded back up to $3,950 by the beginning of the following week. However, on March 23, a huge red candle pushed it down to $3,910. It attempted to recover the next day but ended up sinking as low as $3,853. It is currently trading around $3,850.
SPX’s dive on March 23 was likely due to Fed Chair Jerome Powell and US Secretary of the Treasury Janey Yellen testifying before the US House of Representatives Financial Services Committee. While there have been spikes in employment and inflation measures recently, Powell said the policy must remain the same for now.
He noted that recent stimulus was unlikely to fuel “out of control” longer-term inflation. When asked about tapering asset purchases, Powell said markets would be told: “well ahead of time.” Meanwhile, Secretary Yellen said US President Joe Biden would look to make long-term investments in the economy to make it “more productive” once the pandemic was over.
GBTC
Grayscale Investments is the world’s largest digital currency asset manager. They offer several crypto-based trusts, a few of which are available OTC. Its most famous asset is the Grayscale BTC Trust (GBTC). GBTC has largely followed the same trajectory as BTC. This means it had a similarly dismal week. Although its all-time high was in the halcyon days of mid-February, GBTC still saw a nice boost last week to $54. However, from March 22, GBTC has been trading almost exclusively down. It is now trading around $44.
Recently, Grayscale announced it would be offering five new investment trusts. Earlier this week, Grayscale CEO Michael Sonnenshein spoke on CoinDesk TV about a potential BTC ETF. A BTC ETF would likely remove GBTC from its dominant position. The ETF would likely offer investors far lower fees and negate the fund’s premium/discount discrepancies.
Sonnenshein said the trust’s 2% annual fee would remain, despite speculative threats from potential BTC ETFs. He accounted the forces of supply and demand for Grayscale’s collapsing premium. “There have been so many shares created that has put some selling pressure on the stock itself, but ultimately [I] do not foresee this as a product issue,” he said.
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