Bitcoin prices climbed Monday as traders assessed a correction in the US government bond yields and MicroStrategy’s latest investment into the cryptocurrency sector.
The spot BTC/USD exchange rate rose by up to 7.5 percent to $48,572 before correcting lower owing to profit-taking sentiment. At its intraday low, the pair was trading for $45,042, according to data fetched from Coinbase, a US-based cryptocurrency exchange.
Bitcoin dropped last week by more than 21 percent, logging its worst weekly performance since the coronavirus pandemic-led sell-off in March 2020. Its downside moves appeared in the wake of volatile moves in government bond markets. A move higher in yields last week raised doubts over the prospect of a longer period of ultra-low interest rates, which has underpinned Bitcoin’s rise in the previous 12 months.
Monday’s declines in yields helped revive traders’ demand for riskier assets, sending Bitcoin and the US stock futures higher. Nevertheless, many remained alarmed about potential volatility in government bonds that could leave the cryptocurrency market looking for clues over its next short-term bias.
More cues could come from Fed governor Lael Brainard on whether the central bank would decide to push back against the higher bond yields. If it does not intervene, the bitcoin price could risk additional declines despite its strong performance on Monday.
The Fed officials have suggested earlier that rising yields reflect an economic recovery in the US, fueled by vaccine programs and the possibility of additional stimulus. US President Joe Biden advanced his $1.9 trillion fiscal aid bill to the Senate, raising prospects of higher inflation in the coming sessions.
Nonetheless, many analysts believe that it is not the level but the pace of yield recovery that has unsettled investors. Andrea Carzana, a fund manager for London-based Columbia Threadneedle Investments, told WSJ:
“I still think equities are more attractive than bonds, especially if you believe there will temporarily be some inflation.”
Bitcoin, whose correlation with the US stocks has grown higher against the rising yields, tends to tail the anti-inflation sentiment, especially after big corporates like Tesla, Square, and MicroStrategy have openly added the cryptocurrency to their balance sheets to escape the fiat devaluation.
On Monday, MicroStrategy, a Nasdaq-listed business intelligence firm, added another $15 million worth of bitcoin tokens to its reserves. With that investment, it now holds 90,859 BTC, now valued at more than $4.48 billion.