Bitcoin drops 4 percent from its recent high as Treasury yields hit levels not seen since 2007

[Firewall Rabbit]

Bitcoin fell roughly 4 percent from its recent peak near $87,000, dropping to an intraday low around $83,200 on September 23 and 24, as a combination of surging US Treasury yields and a resurgent dollar weighed heavily on cryptocurrency prices more broadly. The US 10 year Treasury yield surged to between 5.11 and 5.13 percent, a level not seen since 2007, while Bitcoin, which historically tends to move inversely to the strength of the dollar, came under direct pressure as the dollar index rallied at the same time.

The underlying economic picture driving the move includes increasingly hawkish signals from the Federal Reserve, with market implied odds of a rate hike at the upcoming October 28 meeting jumping to between 70 and 75 percent, alongside a stronger than expected S&P Global flash composite PMI reading of 58.4, its strongest level since July 2021, and oil prices crossing the $100 mark, both of which have amplified inflation concerns and correspondingly reduced expectations of any near term Fed easing.

Despite the price drop, US spot Bitcoin ETFs actually recorded $2.3 billion in net inflows across four consecutive trading days over the same period, suggesting that longer term institutional allocators were largely unmoved by the short term price action, with macro traders reacting to yields and dollar strength instead driving most of the immediate volatility. Most major cryptocurrencies declined in tandem with Bitcoin during the selloff, with the persistently high correlation between different tokens during downturns once again meaning there was little genuine refuge to be found by simply diversifying across different crypto assets.

Bitcoin drops from eight-month high as yields and dollar risecryptobriefing.com