If US bond yields rise above 2%, we could expect to see a drop in bitcoin’s price as the coin struggled to capitalize on the recent bull run above $61K as traders continue to assess the impact of the rising bond yields so let’s take a closer look in our latest BTC news.
With the markets anticipating more interest rate growth in the 10-year Treasury note, the overvalued BTC/USD exchange rate hasn’t got a clear path ahead. The pair dropped by 13.87% from its record high of $61,788 in the same period which saw the 10-year note yields hit a 14-month high of 1.726%. Investors have sold their government bonds en masse to look for a new opportunity in sectors that will benefit them the most after the economy reopens including energy and travel.
They reduced the exposure in markets and performed well during the COVID pandemic like the tech stocks and BTC but doubts emerged over the rallies’ longevity against the economic growth in the US. BTC was able to post a record high with more institutions showing interest in the potential to act as a hedge against inflation. Corporations like Microstrategy, Tesla, and Square added BTC to their balance sheets as an alternative to their cash reserves.
In the meantime, Bank of New York Mellon, Mastercard, Goldman Sachs, PayPal, Morgan Stanely launched or announced that they will integrate new BTC-enabled services into their traditional platforms which will create more pathways for the investors to gain more exposure in the crypto market. The rising US bond yields seem to be among the few headwinds for BTC before rallying further ahead. If the interest rate returns on Treasury rise, it will strengthen the US dollar’s purchase power and will affect BTC which is considered as an anti-fiat asset.
Chantelle Schieven who is the head of research at Murrenbeeld $ Co noted that the Federal Reserve will “jawbone the markets” if the yields increase above 2%. She stated that the US central bank will start working on a framework for capping the interest rate returns on bonds but it will take more meetings before they reveal the easing guidance. Mr. Powell on the other hand didn’t provide any guidance on how the FED will deal with the rising yields which prompted Ms. Schieven to expect more meetings.
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