More BTC shocks are to be expected in the near-term despite the latest price rebound so the traders should get used to the market shocks as we can see more in our latest BTC news today.
With the coronavirus cases dropping, another round of stimulus checks looking like they are on the touch of the hand, millions of Americans are getting vaccinated so the expectations are also surging higher and wait for the US economy to expand. A Reuters poll showed that 90 percent of the 120 economists believe that the economy will reach pre-COVID levels in one year.
The expectations of a much stronger economy are pushing the long-term interest rates higher with the 10-year Treasury note yielding 1.455 percent versus the 0.93 percent at the start of the year. While this is a usual response to the optimistic outlook, it does pose risks for assets that are known for their wild bull runs. These assets include bitcoin which surged more than 1200 percent from the mid-March events and investors chose it as an alternative to the poor yields.
The data by FactSet shows that the S&P500 now trades 22 times higher than the earnings over the next year and this is the highest price-to-earnings ratio in 20 years, higher than It was during the 2009 economic crisis. Even a modest move in the yields will cause volatile moves in the stocks but on the other hand, BTC expects to absorb the pressure as long as the Treasury yields continue rising. Sudden spikes in interest rates will also pose more risks for the cryptocurrency given how it managed to correct by 21 percent a week ago as the bond sell-off picked momentum.
The Federal Reserve officials clarified that they plan to leave the short-term interest rates at basically zero while buying Treasury and mortgage securities $120 billion per month. If the COVID crisis fades away faster though, then it could pose a question of the central bank’s commitment and the continuation of the asset purchasing program. Ben Lilly, the author of ChainPulse wrote:
“If the FED decides to change course and tighten up, this can act as a major headwind for crypto because, in such an environment, capital will be less likely to flow into assets at the tail end of the risk curve… Aka crypto.”
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