Bitcoin posted an 11% gain last week, reaching highs comparable to those of July. However, according to some analysts, this upward momentum could soon be disrupted by macroeconomic headwinds.
US bond yields, a threat to Bitcoin
Yuya Hasegawa, an analyst at Bitbank in Japan, sounded the alarm about developments in the US bond market. According to him, rising government bond yields are “an area of interest for bitcoin in the near term.”
When bond yields remain high, they tend to become more attractive than assets considered risky, such as Bitcoin. This phenomenon may encourage investors to abandon cryptocurrencies in favor of US bonds, which are perceived as safer.
Since mid-October, the yield on the 10-year Treasury note has hovered between 4.02% and 4.08%, a level high enough to make it an attractive alternative to crypto-assets.
In addition, recent stronger-than-expected US economic data revived concerns about the Federal Reserve’s (Fed) monetary policy. Better-than-expected retail sales and falling jobless claims raise doubts about how quickly the Fed could ease its interest rate policy.
A rate cut in November remains possible
Despite these concerns, Hasegawa believes there is still a “reasonable chance” the Federal Open Market Committee (FOMC) will decide on a 25 basis point cut at its meeting in early November. This view appears to be shared by most traders, as only 9% of them expect the status quo on US interest rates.
In the short term, the recent decision of the European Central Bank (ECB) to cut its key rates by 25 basis points could also support the price of Bitcoin. Valentin Fournier, an analyst at BRN, explains that “this rate cut should increase liquidity in the markets, thereby increasing the performance of risk assets such as Bitcoin.
The combination of significant flows into Bitcoin ETFs and favorable macroeconomic catalysts suggests the possibility of strong price growth. Fournier even goes so far as to consider a scenario where Bitcoin could reach $70,000 by Monday if it avoids rejection over the weekend.
In conclusion, although macroeconomic issues remain, particularly related to bond yields and Fed policy, Bitcoin appears to be benefiting from an overall favorable context in the short term. However, investors will need to remain vigilant in the face of potential turbulence in the coming weeks.
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I am passionate about Bitcoin, I love exploring the intricacies of blockchain and cryptocurrency and sharing my discoveries with the community. My dream is to live in a world where privacy and financial freedom are guaranteed for everyone, and I firmly believe that Bitcoin is the tool that can make this possible.
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The comments and opinions expressed in this article are solely those of the author and should not be considered investment advice. Before making any investment decision, do your own research.