Bitcoin recorded an 11% gain last week, reaching highs comparable to those of July. However, according to some analysts, macroeconomic headwinds could soon disrupt this upward dynamic.
US bond yields, a threat to Bitcoin
Yuya Hasegawa, an analyst at Bitbank in Japan, sounded the alarm about developments in the US bond market. According to him, rising Treasury yields are “an area of concern for Bitcoin in the near future.”
Indeed, when bond yields remain high, they tend to become more attractive than assets considered risky, such as Bitcoin. This phenomenon may encourage investors to abandon cryptocurrencies in favor of American bonds, perceived as safer.
As of mid-October, the yield on the 10-year Treasury note was hovering between 4.02% and 4.08%, a level high enough to represent an attractive alternative to cryptoassets.
Furthermore, the recent economic data more robust than expected have revived concerns about the monetary policy of the Federal Reserve (Fed). Better-than-expected retail sales and falling unemployment claims cast doubt on how quickly the Fed could ease its rate policy.
A rate cut in November remains possible
Despite these concerns, Hasegawa believes there is still a “reasonable chance” that the Federal Open Market Committee (FOMC) will opt for a 25 basis point cut at its meeting in early November. This opinion seems to be shared by the majority of traders, since only 9% of them anticipate a status quo on American interest rates.
The recent decision by the European Central Bank (ECB) to lower its key rates by 25 basis points could also support the price of Bitcoin in the short term. Valentin Fournier, analyst at BRN, explains that “this drop in rates should increase liquidity in the markets, thus boosting the performance of risk assets such as Bitcoin.”
The combination of significant flows into Bitcoin ETFs and favorable macroeconomic catalysts suggests the possibility of a strong price rise. Fournier even goes so far as to consider a scenario where Bitcoin could reach $70,000 by Monday, provided it avoids a rejection over the weekend.
In conclusion, although macroeconomic challenges persist, particularly linked to bond yields and Fed policy, Bitcoin appears to benefit from an overall favorable context in the short term. Investors will, however, need to remain vigilant in the face of potential turbulence that could occur in the weeks to come.
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