Bitcoin Retreats from Six-Week Peak Amidst Rising Bond Yields

Bitcoin, the world’s largest cryptocurrency, saw a brief surge to $28,500 on Monday, but its rally was short-lived as it retreated by 1.9% on Tuesday, settling at approximately $27,600 as of 10:50 a.m. in Singapore.

This sudden downturn was attributed to a significant jump in bond yields, which diminished demand for riskier investments.

The surge in yields on the 10-year US Treasury, reaching levels not seen since 2007, has raised expectations of a prolonged period of high Federal Reserve interest rates to combat inflation.

This tightening of financial conditions has created headwinds for both stocks and cryptocurrencies like Bitcoin.

“The price pop was short-lived as the macro environment is still hawkish on rates,” stated Cici Lu McCalman, founder of blockchain adviser Venn Link Partners. “The rise in US Treasury yields weighed on Bitcoin.”

Additionally, the crypto market faces another challenge with the trial of Sam Bankman-Fried, the founder of FTX exchange, over the collapse of the exchange in November 2022. Bankman-Fried, who faces charges of fraud and money laundering, could potentially face a lengthy prison term if found guilty.

Jury selection began on Tuesday, drawing attention to the regulatory and legal challenges within the crypto industry.

Despite these setbacks, Bitcoin enthusiasts find solace in historical patterns. October has historically been a strong month for Bitcoin, with an average increase of 24% over the past decade.

Also, Bitcoin’s dominance in US crypto trading has surged to 71% in September, indicating a shift among institutional traders who may be seeking refuge in Bitcoin amidst rising real yields and worsening global risk sentiment.

While Bitcoin has rebounded 67% this year, it still remains well below its pandemic-era peak of nearly $69,000, leaving investors cautiously optimistic about its future trajectory.