Crypto Analyzer

Bitcoin (BTC) Price Drops to $66K Amid Rising Treasury Yields: What Investors Need to Know

Bitcoin (BTC) has experienced a drop in price, trading at around $66,000 during Asian trading hours on Tuesday. The decline in BTC price can be attributed to the resurgence of Treasury yields and concerns that the Federal Reserve may delay rate cuts until later in the year.

Meanwhile, other cryptocurrencies like Ether (ETH) are holding relatively steady, with ETH trading above $3,300 at the time of writing. The CoinDesk 20 (CD20) index was down 0.6% at 2,532.

The rise in the yield on the 10-year Treasury note to a two-week high of 4.40% is causing concerns among investors due to persistent inflation and unexpectedly strong manufacturing activity. This increase in the risk-free rate often leads to a shift of funds from risk assets like Bitcoin to traditional investments such as gold. However, gold has remained resilient despite the downturn in Bitcoin and the tech-heavy Nasdaq index.

According to Semir Gabeljic, director of capital formation at Pythagoras Investments, the recent downtrend in Bitcoin is linked to the macro outlook on interest rates and rising Treasury yields. Higher interest rates usually reduce investor appetite for risk, impacting the prices of assets like Bitcoin.

Market predictions on rate cuts by the Federal Reserve vary, with bettors on Polymarket ruling out a rate cut by May and split on whether one will happen in June. The CME Fed Watch tool currently shows a 97% chance of rates staying the same after the May meeting.

Recent data from Coinglass indicates that over $245 million in long positions have been liquidated in the last 24 hours, with $60 million in BTC positions facing losses. This suggests a significant amount of leverage in the market has been unwound.

Jun-Young Heo, a Derivatives Trader at Singapore-based Presto, noted that perpetual futures funding rates for most crypto assets have returned to 1bps, and global futures open interest decreased by 10% overnight, indicating the closure of leveraged long positions. He also mentioned that the downturn in BTC and ETH prices below the 20-day moving average has prompted some trend followers to view this as the end of a two-month-long rally.

As investors navigate the evolving market conditions, it is essential to stay informed about the impact of rising Treasury yields and interest rates on cryptocurrency prices. Keeping a close eye on market indicators and expert analyses can help investors make informed decisions in times of market volatility.