S&P 500 hits new all-time high, Bitcoin drops heavily to $38K under selling pressure.

While the S&P 500 continues to reach new all-time highs, the cryptocurrency market is witnessing a massacre as it interfaces with traditional finance and experiences capital outflows. Last night, Bitcoin dropped to 38,555, and Ethereum fell to 2,168, causing a sharp decline in the overall cryptocurrency market.

U.S. and Japanese Stock Markets Continue to Reach New Highs as Tech Stock Earnings Season Begins

In recent days, the U.S. and Japanese stock markets have been reaching new highs. Despite the strong economic data in recent weeks causing market expectations for a rate cut in March to decline, according to the CME Group's FedWatch tool, 50.2% of traders believe that the interest rates will remain unchanged in March. However, the market seems optimistic that this suggests a soft landing for the U.S. economy, reducing the urgency for the Federal Reserve to make preemptive rate cuts.

The U.S. is also entering the earnings season for tech stocks. Netflix's stock surged 8% in after-hours trading on Tuesday after the company announced a net addition of 13.1 million subscribers in the fourth quarter. Netflix introduced an ad-supported service and cracked down on password sharing, but it now boasts 260.8 million paid subscribers, setting a new record for the service. Additionally, Tesla is set to release its fourth-quarter earnings today after the market closes.

Heavy Selling Pressure from Mt. Gox and GBTC Drives BTC Prices Downward

As Grayscale's GBTC successfully transitions into an ETF, the market discount has narrowed, prompting funds previously locked up to flee. Reports indicate that cryptocurrency exchange FTX has sold nearly $1 billion worth of the company's shares, with almost all of FTX's 22 million GBTC shares now sold.

It is also rumored that Mt. Gox is about to launch a claims process, with around 200,000 BTC expected to be unlocked in the next two months.

Combined with Mt. Gox and GBTC, there are a total of 700,000 bitcoins waiting to be liquidated, causing BTC prices to continue their decline.

Bitcoin dropped to $38,555 last night, but Matrixport analyst Markus Thielen believes that the Bitcoin greed and fear index has not reached the level for contrarian buying yet, and BTC could retrace to the $38K range, even as low as $36K.

Matrixport: Buy Bitcoin and Wait, Greed Index Has Not Bottomed Out Yet