Bitcoin could face turmoil on US Treasury yields, Fed policy: Analyst

Bitcoin It has risen 11% over the past week and is within range of the highs recorded in July. However, problems may arise in the future. bitcoin price Zooming out to look at macroeconomic factors, one analyst said:

Yuya Hasegawa, a cryptocurrency market analyst at Japan's BitBank, emphasized that the rise in US bond yields is “a cause for some concern when considering the future of Bitcoin.”

Simply put, if bond yields start to stay high, bonds may become more attractive than riskier assets like Bitcoin. This could lead investors to siphon money from risky assets like stocks and cryptocurrencies and reinvest it in U.S. Treasuries.

As of mid-October, the yield on 10-year U.S. government bonds is hovering between 4.02% and 4.08%. That's down slightly from September, when yields rose to 4.3%. However, it is still high enough to create an attractive alternative to riskier crypto assets.

That's not the only reason Hasegawa is worried.

“Better-than-expected retail sales and lower unemployment claims have raised concerns across financial markets that the Fed will not continue to cut rates as quickly,” he said. decryption.

The possibility that the Fed won't cut rates again in November is not an immediate threat. Analysts at BitBank said there was still a “good chance” the Federal Open Market Committee (FOMC) would decide to cut interest rates by 25 basis points after its meeting in early November.

And for the most part, traders seem to agree with him. As of Friday morning during European trading hours, about 9% of traders thought the Federal Reserve would keep interest rates on hold at its next meeting, according to CME. The remaining participants, like Hasegawa, believe the market will face another 25 basis point rate cut.

First of all, the European Central Bank said in the press on Thursday that it had cut its key interest rate by 25 basis points “based on the latest assessment of the inflation outlook, underlying inflation trends and the strength of monetary policy spillovers.” . release.

Although the ECB warned that economic conditions “remain restrictive,” there is reason to believe that this will push up Bitcoin prices in the short term.

“We expect this rate cut to increase overall market liquidity and improve the performance of risk assets such as Bitcoin,” BRN analyst Valentin Fournier said in a note shared. decryption.

“The combination of strong ETF inflows and macroeconomic catalysts indicates an imminent breakout,” he added. “If Bitcoin can avoid the weekend rejection, it could reach $70,000 by the final test on Monday.”