Bitcoin braces for ‘crucial’ 36 hours amid US yield sensitivity

Global markets are bracing for volatility ahead of the Federal Reserve’s interest rate decision and key US inflation data, with Bitcoin investors particularly alert.

A 30-day correlation between Bitcoin and the US 10-year Treasury yield stands at minus 53, among the most negative readings since 2010. This suggests that the largest digital asset is moving opposite to the benchmark bond yield to an unusual degree.

Bitcoin dipped on Tuesday, falling up to 3.2 per cent to a one-week low and hovering around $67,780 in London. Smaller tokens like Ether and Dogecoin also saw losses.

While Bitcoin hit a record high in mid-March, recent attempts to break all-time peaks have faltered, raising concerns among analysts. The next 36 hours are deemed crucial.

Inflows into Bitcoin ETFs have totaled $15.6 billion since January, but recent days saw outflows, potentially signalling shifting investor sentiment. The inflation data, expected to show heightened price pressures, may impact the Fed’s policy outlook, potentially affecting Bitcoin’s trajectory.

Technical analysis suggests neutral short-term momentum for Bitcoin, but long-term prospects are viewed positively. Anand Gomes, co-founder of Paradigm, likened the crypto market to a “junkie” reliant on bullish news, implying downward pressure in its absence.

Attribution: Bloomberg