Bitcoin (BTC) has encountered obstacles in its attempt to reach the record high of US$73,800 it achieved three months ago, resulting in a period of stagnation in its growth. Despite maintaining a relatively stable performance, experts believe this is a typical pause in a bull market. However, recent concerns have emerged regarding macroeconomic factors that could impact this growth.
CoinDesk spoke to cryptocurrency analyst Chang, who noted that while Bitcoin remains strong, there are ominous macro factors at play. He attributed the instability of bond yields to weak demand, particularly in comparison to the issuance of US Treasury bonds. Chang suggested that any negative impact on Bitcoin is likely to be due to yields and the dollar index.
The volatility in US Treasury bond yields is influenced by several factors, including concerns about US debt, an increase in bond supply, and rising Japanese government bond yields. Data from TradingView shows that the yield on 10-year Treasury bonds recently rose by 24 basis points to reach 4.55%. Analysts predict that yields above 4.7% could result in significant volatility in the stock market.
Higher yields lead to increased borrowing costs, making riskier assets like Bitcoin and technology stocks less appealing. Chang anticipates that yield volatility will persist until June, maintaining a close correlation between Bitcoin and the equity markets. The two-year Treasury yield is currently hovering around 5%, and the expectation of a 5% return on these bonds may prompt traders to reallocate funds from stocks and cryptocurrencies to safer investments.
Peter Oppenheimer, head of Macro Research at Goldman Sachs, explained during an interview with Bloomberg Surveillance that bond yields have reached a level where any further increase will impact all asset classes.
Traders are closely monitoring the release of the personal consumption expenditures (PCE) price index, a crucial indicator for the Federal Reserve’s interest rate decisions. The upcoming PCE data, which measures inflation, is highly anticipated as it could directly influence the performance of Bitcoin and other high-risk assets.
Disclaimer: The views and opinions expressed in this article, as well as those of any individuals mentioned, are for informational purposes only and should not be considered as financial or investment advice. Investing or trading in cryptocurrencies carries a risk of financial loss.