Key Bitcoin takeaways:
- Bitcoin fell wildly last week as the US dollar benefited from rising Treasury yields.
- Nonetheless, buying sentiment slipped close to a support level technique maintained the cryptocurrency's bullish bias.
- A further rise in yields could cause bears to test the support zone for a breakdown.
The BTC / USD exchange rate rebounded strongly and erased much of its losses from the previous week on Monday. It was able to close the sessSunday ion above $ 45,000, a level that falls into the support zone that has capped Bitcoin's bearish attempts to bring about full sales.
Nonetheless, the cryptocurrency fell as low as 26.30% after setting its all-time high above $ 58,000 on February 21. There was a clear indication of profit taking in all riskier markets , including technology stocks. The carry trades themselves came on the heels of a rally in the US dollar at the weekend, supported by a dramatic rise in Treasury yields so far this year.
10-year US Treasury bill yield corrected lower at the end of last week. Source: US10Y on TradingView.com
The interest rate The benchmark 10-year note rose from 1% in early 2021 to more than 1.6 percent before the February close, its highest level in a year. Its rise reduced the appeal of Bitcoin, a non-performing asset, as it was already trading at overvalued levels.
This led to a massive downward correction, with the price falling as low than $ 43,016 in the previous session . However, a correction in the yields of the 10-year notes at the end of last week and the start of the new one coincided with a rise in the Bitcoin markets.
Technical support held
The reverse movements between the yield on the 10-year notes and Bitcoin this week do not guarantee a negative correlation. More so, they have to do with a strong sentiment of buying in Bitcoin markets in a provable support area highlighted in the graph below.
Bitcoin finds the support area that sent its prices for the last time at record levels. Source: BTCUSD on TradingView.com
So far the h range as the capped bears of expand their selling bias. Many analysts see as validation that Bitcoin's ongoing correction will not last. Instead, the bulls will take control of the market and push prices back to their recent all-time highs.
Bitcoin this week
Santiment notes that Bitcoin's 30-day correlation with the stock market hasAmerican has grown stronger lately. At the heart of their copy trends is - again - the rising bond yields .
The first big boost comes from improved vaccine deployment around the world, rekindling hopes for greater economic recovery than expected once life returns to normal. Then the Democrats took control of the US Senate, allowing President Joe Biden to pass his ambitious $ 1.9 billion stimulus that would rock the economy further.
He has pushed inflation expectations higher, causing bond markets to sell off in recent weeks.It is also due to the fact that investors fear that the Federal Reserve is tightening their monetary policies faster than previously reported. Central Bank President Jerome Powell has has indicated that his office will keep rates lower until they push inflation above 2 percent.
This tense climate highlights the recent wild swings in the tech and Bitcoin equity markets and the growth of stocks that lost the most during the pandemic. Kindly note:
Bitcoin fluctuates according to the S&P 500. Source: Santiment
Irregularly, a further rise in US bond yields could push Bitcoin prices lower. If this happens, the pressure to maintain the bias at the hike would fall in the area of tech support, as mentioned above. Otherwise, the price risk drops to $ 40,000 or less.