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Could Plunging Treasury Yields Be Why BTC Price Slumped Tuesday?
Bitcoin’s price plummeted by approximately 7.2% on Tuesday, with a high of over $102,500 being swiftly replaced by the current figure of around $95,100. The sudden and substantial drop in value coincided with a dramatic surge in Treasury yields, which appears to have significantly impacted risk assets across the board.
As a result of declining bond prices, Treasury yields rose. This is because when the dollar weakens and an economy grows at a faster rate than expected, bond coupons and principal investments become less valuable as they mature. The ensuing market sell-off led investors to discount bonds, causing a rise in yields.
The sudden drop in Bitcoin’s price was not limited to it alone, as other cryptocurrencies like Ethereum, Ripple, and Solana also fell by considerable margins. The Nasdaq Composite Index lost over 2% during the trading day, with significant losses being seen in the tech sector.
In contrast, the blockchain market celebrated following a rally last weekend, where Bitcoin surged above $98,000 after remaining stagnant on Friday and Saturday around the $98,000 level. This increase was largely attributed to speculation that the new Republican-controlled Congress would be more sympathetic to cryptocurrencies than its predecessor. Ripple Labs CEO Brad Garlinghouse had even referred to this as “the most pro-crypto Congress in history.”
However, these optimistic sentiments did not last long, as concerns over increased inflation due to faster-than-expected growth triggered a sell-off of bonds and risk assets alike.
The market data is clear: rising Treasury yields are a significant red flag for investors seeking higher returns.
Source: cryptopotato.com
