Bitcoin is on its way to its worst weekly decline in nearly a year

Bitcoin's rally this year has risen rapidly, putting it on track for its worst weekly decline in nearly a year amid broader losses in risky assets.But the price of a single bitcoin fell by $ 7,000 in one week, and Bitcoin is suffering its biggest drop in months.

Competitors also took a hit with the Bloomberg Galaxy Crypto Index - which tracks five cryptocurrencies including Bitcoin - down 23%. The drop in price comes against the backdrop of chaos in the global market.

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The largest cryptocurrency is down as much as 20% this week, the most since March, and has settled at around $ 46,925 as of 10:22 am in Hong Kong. The broader Bloomberg Galaxy Crypto Index, which tracks Bitcoin, Ether, and three other cryptocurrencies, is down 22% this week.

Why is cryptocurrency falling behind?

The sharp rise in bond yields on Thursday points to a potential acceleration in growth and inflation, prompting traders to reconsider their stance on riskier assets as equities in tech stocks such as Tesla and Peloton took a hit.

This had a huge impact on cryptocurrencies.US Treasury Secretary Janet Yellen may also have sold the coin's owners, saying on Monday that bitcoin was a very ineffective way of conducting transactions.

Risky assets are taking a hit right now - we're seeing stocks fall and cryptocurrencies follow.The dollar is on the rise, which is a good indicator to expect a drop in Bitcoin and cryptocurrencies.

Bitcoin's rough correction comes amid wider chaos in global markets, as the surge in bond yields portends mounting expectations that growth and inflation are moving higher and forcing traders to reassess their positions across multiple asset classes. 

The high-tech Nasdaq 100 Index has declined in seven of the past eight sessions as stocks such as Tesla Inc. And Peloton Interactive Inc.

Bad week for Bitcoin

The rapid increase in bond yields was the latest setback in a turbulent week for Bitcoin.The start of this week was marked by the selling of the cryptocurrency.

Bitcoin's value jumped 50% after Tesla announced it would accept payment in cryptocurrency.Musk's comments may be partly responsible for the impairment. In the weekend leading up to the sale, he said the bitcoin price appeared to be too high.

Earlier this week, the Microsoft owner said he was not a fan of the cryptocurrency.Some have suggested that Bitcoin could suffer a similar downturn in 2017.

Bitcoin stock

The bond yield is the return an investor achieves on the bond. Bond yield is defined as the annual amount that you can receive in interest from the bond, as a percentage of the initial cost of the bond. Bond yield is used to compare potential returns for all types of bonds.

Risky assets are taking a hit right now - we are seeing stocks drop and cryptocurrency relay. The dollar is strengthening, which is a good indicator to expect a drop in Bitcoin and cryptocurrencies.

Bitcoin's weakness in the face of market volatility raises questions about its effectiveness as a store of value and a hedge against inflation, a key argument among supporters of its staggering five-fold rise over the past year. The critics have maintained that the boom in digital assets is a speculative bubble destined to repeat the boom and bust in 2017.

Bond yield curves are closely followed in financial news. This is because it is seen as an indicator of both the overall strength of the market and of particular exporters.

While Bitcoin is often described as the new digital gold, the yellow metal is profiting for the time being with spot gold remaining at $ 1,768 an ounce, down less than 1% for the week. The Bloomberg Dollar Spot Dollar Index rose 0.3% in the same period, on its way to post its strongest gains in a month.

The heavy selling at the Grayscale Bitcoin Trust, the largest fund of its kind in the world, as well as the expiration of Bitcoin options also contribute to volatility. Confidence is down 20% this week, with losses overshadowing at some point beyond the underlying assets, as the huge price premium on Bitcoin evaporated as investors took advantage of these gains.