Bitcoin is trading near $68,000, holding a relatively narrow range even as a sharp rise in U.S. Treasury yields signaled growing pressure across global markets.
The yield on the benchmark 10-year U.S. Treasury note climbed to around 4.42% on Thursday, up roughly 46 basis points since late February, data shows.
“However, this time the backdrop is far more complex, and containing the bond market is not as simple as it may appear,” they added. “This will soon be the market's biggest story.”
Such moves in the bond market are often meaningful because yields affect borrowing costs throughout the economy, from mortgages to corporate loans, while frequently setting the tone for risk assets, including stocks and crypto.
The month-long rise in yields has been driven in part by oil prices and geopolitical tensions in the Middle East as the U.S and Israel’s war with Iran approaches its fifth week since its Supreme Leader was assassinated.
Higher energy prices typically feed into inflation, and when inflation expectations rise, bond investors demand higher yields to compensate for the erosion of purchasing power. That repricing has forced investors to reconsider the outlook for interest rates.
Higher interest rates typically weigh on risk assets by increasing financing costs, making safer assets, such as government bonds, more attractive relative to stocks and crypto.
Analysts have said the crypto is currently being pulled in opposite directions by macroeconomic forces.
In other words, investors are paying for protection against further declines, but markets are not yet pricing in a severe selloff.
There are also signs that some investors are accumulating Bitcoin during dips.
Recent net outflows from exchanges suggest coins are being moved into storage rather than positioned for immediate sale, QCP wrote. All while Bitcoin’s share of the total crypto market has been rising, in a sign investors are favoring the world’s largest crypto during uncertain periods.
For now, traders are keeping an eye on the bond market as the key signal to watch.
If the 10-year Treasury yield continues rising toward the 4.5% range, financial conditions would likely tighten further, increasing pressure on equities and blue-chip cryptocurrencies.
That would leave Bitcoin trading less on crypto-specific developments and more on macroeconomic forces, according to the experts.
