Bitcoin Back Down to $66K as Rising Treasury Yields Catch Investor Interest

BY Coindesk | TREASURY | 04/03/24 01:06 AM EDT By Sam Reynolds
  • Bitcoin hovers near $66,000, with the CoinDesk20 Index signaling broader market weakness.
  • Crypto (CRCW) futures rates and open interest have decreased, signaling a potential end to a two-month rally.

Bitcoin {{BTC}} held on to losses during the Asian trading hours on Tuesday, trading at around $66,000, as traders digested resurgent Treasury yields and the possibility that the Fed might delay rate cuts until later this year.

At the time of writing, ether {{ETH}} changed hands above $3,300, while the CoinDesk 20 (CD20) was down 0.6% to 2,532.

The yield on the 10-year Treasury note clocked a two-week high of 4.40% overnight due to persistent inflation and unexpectedly strong manufacturing activity. An uptick in the so-called risk-free rate typically spurs an outflow of money from risk assets and zero-yielding investments like gold. The yellow metal, however, remained resilient amid the weak tone in bitcoin and Wall Street?s tech-heavy index, Nasdaq.

?Bitcoin retraced down to $65,000, mostly attributed to the recent macro outlook on interest rates and rising Treasury yields,? Semir Gabeljic, director of capital formation at Pythagoras Investments, said in an email interview. ?Higher interest rate environments typically tend to reduce investor appetite to risk.?

On Polymarket, bettors have ruled out a rate cut by May and are split 50-50 on whether one will happen in June. Most of the certain money is on it happening in the fall.

(Polymarket)

The CME Fed Watch tool has a 97% chance of rates staying the same after May?s meeting.

Coinglass data shows that over $245 million in long positions have been liquidated in the last 24 hours, with $60 million in BTC positions getting rekt.

?Perpetual futures funding rates for most crypto assets are back to 1bps, and global futures open interest decreased by 10 percent overnight, indicating some leveraged long positions are closed,? Jun-Young Heo, a Derivatives Trader at Singapore-baed Presto, added.

?As recent bitcoin ETF inflows are stagnating and BTC and ETH market prices came below the 20-day moving average, some trend followers would have regarded yesterday?s downturn as the end of a two-month-long rally,? he continued.

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

fir_news_article