Bitcoin fell in Asia-Pacific and European trading on Thursday as rising bond yields raised concerns that central banks might begin tightening monetary policy earlier than expected.
The benchmark cryptocurrency fell 3.59 percent to $ 48,562, extending its decline after hitting a weekly high of $ 52,666 in the previous session. Elsewhere in the crypto market, high-cap tokens such as Ethereum, Cardano, Binance Coin and others also fell under the influence of Bitcoin, suggesting coordinating daytrader sales for short-term gains.
Bitcoin is selling at levels above $ 52,000. Source: BTCUSD on TradingView.com Powell Speech Ahead
A recent government bond sell-off has raised government bond yields and reduced investor appetite for Bitcoin, which has soared in an ultra-low interest rate environment.
Some money managers are betting that additional coronavirus stimulus in the US would spur inflation and prompt the Federal Reserve to tighten its monetary policy, starting with a rise in policy rates. This also resulted in higher real yields, reflecting the yield on bonds after adjusting for inflation expectations.
Bitcoin has become a reactive asset amid uncertainty in the bond market. The cryptocurrency wobbled one day to make profits the next session, and so on. And now a speech by Fed Chairman Jerome Powell is making headlines on the economic outlook. His views on the recent jump in earnings at the Wall Street Journal Jobs Summit on Thursday at 12:05 p.m. ET would give the bitcoin market further clues as to which direction to go next.
However, Mr Powell is unlikely to curtail the Fed’s monetary policies, which include buying $ 120 billion a month in sovereign debt and mortgage securities. The chairman previously stated that the economy is still a long way from reaching its maximum employment and higher inflation targets.
On the other hand, any mention of the introduction of yield curve control (YCC) or a boost to the Fed’s bond-buying program could raise government debt costs and lower yields. This could prove bullish for Bitcoin and the US stock market.
Bitcoin hits businesses
Further bullish tailwinds could be caused by growing corporate interest in Bitcoin as an alternative store of value. While yields are rising, they remain well below their historically higher levels of over 14 percent. This could allow companies to shift some of their cash / bond reserves to Bitcoin.
“The last survey I saw found that 5 percent of publicly traded companies in the US would consider adding Bitcoin to their balance sheets,” said Magentic managing director William E. Quigley in an interview with CNN Business.
“And the reason they think is because companies have trillions of dollars in cash – where are they putting it? There are government bonds and $ 17 trillion of which is negative, ”he added.
The yield on the 10-year US Treasury bill fell slightly to 1.464 percent on Thursday after rising to 1.469 percent in the previous session. At the beginning of the year it was 0.915 percent. Yields rise when bond prices fall.
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