Bitcoin prices fell Monday, setting the stage for a week that expects to stay choppier against a wobbling US government bond market.
The benchmark cryptocurrency shed 0.54 percent during the early New York session, falling to a little over $57,000. The decline appeared as a form of a broader bearish correction that started when BTC/USD formed an all-time high at $61,778. Nonetheless, the sell-off lacked the momentum to turn the downside move into a full-fledged bearish assault.
That is due to…
…Bitcoin’s constant reliance on the US bond yields for cues. The cryptocurrency lately traded in response to how the 10-year Treasury note yield performed. A steeper rise in the interest rate returns prompted a sell-off in the Bitcoin market. Meanwhile, a corrective or cooled-down bond yield sent the cryptocurrency prices higher.
On Monday, the 10-year Treasury note recovered some grounds, sending yields lower to 1.698 percent from 1.729 percent on Friday. Yields plunge when bond rates climb.
Yields have climbed seven weeks in a row, limiting Bitcoin’s upside sentiments because of its overvalued nature following 2020’s explosive price rally. Similarly, tech stocks suffered from the jump in longer-dated Treasurys. Future earnings become lesser when bond yields jump.
Bitcoin Holding Crucial On-Chain Support
The tech-heavy Nasdaq Composite surged 0.8 percent in morning trading, raising hopes that Bitcoin would pursue the index’s uptrend. Meanwhile, the cryptocurrency traded inside an ascending channel pattern that promised further growth but with underlying downside risks.
Dubbed as Rising Wedge, the pattern alerts about a potential bearish reversal ahead of or at the time when the price hits its apex — where its trendlines converge. In Bitcoin’s case, the apex is near $70,000, pointing to a continued rally towards the said level.
That is despite forecasts about rising bond yields.
Many analysts anticipate that the US 10-year Treasury note rate would rise above 2 percent, especially as the Federal Reserve ignored any form of intervention in its forward guidance last Wednesday. On the other hand, bitcoin bulls see the prospect of higher inflation keep investors’ interest alive in the cryptocurrency.
“Transaction history shows that Bitcoin and sits on top of stable support,” noted Konstantin Anissimov, executive director at CEX.IO cryptocurrency exchange. “Nearly 830,000 addresses had previously purchased 490,000 BTC at $55,000.”
“Bitcoin and Ether will likely continue trending upward and may march to new all-time highs as long as these crucial interest areas hold,” he told Blocdesk in an email statement.