Rising US Treasury yields are increasing pressure on the cryptocurrency market, particularly Bitcoin. Recent analyses indicate that rising US Treasury bond interest rates are increasing the opportunity cost for investors to hold Bitcoin, which could reduce interest in digital assets.
According to the analysis, the rising risk-free yields offered by US government bonds are reducing the attractiveness of alternative investment instruments such as Bitcoin and Gold. Government bonds, offering higher interest rates, are becoming more appealing to investors seeking safe havens compared to highly volatile crypto assets.
The yield on two-year US Treasury bonds rose to 4.05%, reaching its highest level in 12 months. This increase was driven by shifts in market expectations regarding monetary policy. While investors initially expected the Federal Reserve to make at least two interest rate cuts by the end of the year, recent economic data has significantly reversed these expectations.
Both consumer inflation and producer price index data for April exceeded expectations, indicating a renewed strengthening of inflationary pressures. Following this, expectations for interest rate cuts weakened in the markets, while the possibility of further rate hikes emerged.
According to FedWatch data from the CME Group, the probability of a rate hike in December rose from 22.5% to 44% in just one week. This change highlights a sharp shift in expectations regarding monetary policy.
In light of these developments, the Bitcoin price is trading sideways around $81,000. Furthermore, BTC is trading below its 200-day moving average, which is around $82,000. Technical analysts note that the failure to break above this level is putting pressure on the short-term outlook.
Experts say that if bond yields continue to rise, Bitcoin’s attractiveness to institutional investors may decrease, but long-term investors may view macroeconomic fluctuations as accumulation opportunities.
*This is not investment advice.
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