Bitcoin
Bitcoin faces ‘crucial’ 36 hours as sensitivity to US yields rises
(Bloomberg) — Global markets are on edge ahead of a Federal Reserve interest rate decision and key U.S. inflation figures. Bitcoin investors have reason to be particularly alert about potential volatility.
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A 30-day correlation between Bitcoin and the 10-year U.S. Treasury yield is at minus 53, one of the most negative readings in data compiled by Bloomberg since 2010. The metric suggests the largest digital asset is currently moving toward opposite for benchmark bond yields at an unusual level.
Bonds could be affected by inflation data and the Fed’s policy outlook, which will be released in a few hours on Wednesday. The correlation study suggests the risk of Bitcoin launching in the wake of the Treasury market.
Bitcoin fluctuated on Tuesday, falling as much as 4.2% to a one-week low and hovering at $67,210 at 9:19 a.m. in New York. Smaller tokens like Ether and meme crowd favorite Dogecoin also generated losses.
Bitcoin hit a record high of $73,798 in mid-March, driven by inflows into dedicated U.S. exchange-traded funds. But it has struggled to new highs over the past three months. For Tony Sycamore, market analyst at IG Australia Pty, Bitcoin’s recent failed attempts to break historic highs ring “alarm bells.”
‘Lack of progress
“The lack of positive progress in recent weeks is concerning given the significant inflows into Bitcoin ETFs recently, which have so far failed to turn the dial,” Sycamore said. “The next 36 hours will be crucial.”
A net $15.6 billion has been invested in ETFs since their launch in January. On Monday, $65 million was removed from products, breaking a streak of 19 consecutive subscription days, according to data compiled by Bloomberg.
Inflation data is expected to show price pressures well above the U.S. central bank’s comfort zone. At the turn of the year, investors were betting on a series of rate cuts from the Fed, but now the debate is whether future easing will represent just a small adjustment in policy.
The prospect of higher costs for longer loans could be a challenging scenario for a speculative asset like Bitcoin, which has already more than quadrupled since the start of 2023 in a return from a deep bear market.
Fairlead Strategies LLC technical analyst Katie Stockton, in a research note, flagged “neutral” near-term momentum for the digital token based on chart patterns, while adding that the longer-term outlook is more positive .
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The crypto market “is like an addict that constantly needs bullish news to stay active,” said Anand Gomes, co-founder of Paradigm, a derivatives platform. “So when there are none, the path of least resistance is lowest.”
–With assistance from Ryan Weeks and Sidhartha Shukla.
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