Pressure on Treasury Yields Challenges Bitcoin’s Bullish Trajectory

After reaching a historic peak of US$73,800 approximately three months ago, Bitcoin (BTC) has faced difficulties in revisiting these high levels, finding itself in a stage of stagnation in its appreciation trajectory. Even with a relatively stable performance, remaining close to its previous records, experts indicate that this is a common pause in a bull market scenario. However, recent warnings point to macroeconomic factors that could interfere with this growth.

“Bitcoin is still strong, but macro factors are ominous,” cryptocurrency analyst Chang told CoinDesk. He commented that the instability of bond yields is due to weak demand, especially in contrast to US Treasury bond issuance. According to him, if there is a negative influence on Bitcoin, it will probably be because of yields and the dollar index.

Volatility in U.S. Treasury bond yields is driven by multiple factors, such as U.S. debt concerns, increasing bond supply, and rising Japanese government bond yields. Recently, the yield on 10-year Treasury bonds increased by 24 basis points to 4.55%, according to data from TradingView. Analysts predict that yields above 4.7% could bring significant volatility to the stock market.

Higher yields imply higher borrowing costs, making riskier assets like Bitcoin and technology stocks less attractive. Chang predicts that yield volatility will persist through June, maintaining a close link between Bitcoin and equity markets. The two-year Treasury yield is currently close to 5%, and the expectation of a 5% return on these bonds could encourage traders to redirect funds from stocks and cryptocurrencies to safer investments.

“We are now at a level in bond yields where rising yields from here will weigh on all asset classes,” explained Peter Oppenheimer, head of Macro Research at Goldman Sachs, during an interview with Bloomberg Surveillance.

Traders are keeping a close eye on the personal consumption expenditures (PCE) price index, a crucial indicator for the Federal Reserve’s interest rate decisions. The imminent release of PCE data, which is key to measuring inflation, is eagerly awaited. This data could directly influence the performance of Bitcoin and other assets considered at risk.

Disclaimer:

The views and opinions expressed by the author, or anyone mentioned in this article, are for informational purposes only and do not constitute financial, investment or other advice. Investing or trading cryptocurrencies carries a risk of financial loss.