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Inflation and employment data pushed US bond yields strongly higher, and the market increased expectations of an interest rate hike by the Federal Reserve, causing Bitcoin to fall below $70,000 and come under regulatory and capital outflow pressure.
US debtinterest rate ” rel=’172550’>produce Cryptocurrencies that have grown rapidly and have been suppressed and have no yield,Bitcoin On Friday it fell below $70,000, its lowest level in nearly three months. Strong inflation and employment data as well as higher oil prices have prompted the market to intensify bets on an interest rate hike by the Federal Reserve (Fed). The cumulative rise in US 2-year Treasury yields over four trading days is the largest since 2022.
Bitcoin fell as much as 2.2% on Friday, reaching its lowest level since August 20. The fall later recovered and at 11 am Singapore time it was around $70,200. At the same time, buying sentiment in Asian technology stocks gained momentum, with stock markets in Taiwan and South Korea leading the way. The MSCI Asia Pacific index rose 1%, but US bond yields remained near Thursday’s highs on concerns about inflation.
The 2-year Treasury yield, which is most sensitive to Fed policy, rose to 4.862% on Thursday. Excluding the Veterans Day holiday on Wednesday, the cumulative increase over the past four trading days was 38.8 basis points. This is the biggest four-day increase since June 15, 2022, Dow Jones market data shows. The 10-year yield also rose above 5% on Thursday.
Gennady Goldberg, head of U.S. interest rate strategy at TD Securities, said the move reflects a reassessment of market expectations for the Fed, betting that policy will become more dovish in the coming months.
Inflation and employment reports in October were back-to-back higher than expected following the US midterm elections. Fed Governor Waller also said on Tuesday that it may be necessary to increase interest rates by two percentage points in December. Goldberg said traders on Thursday expected the first two interest rate hikes before January next year and estimated the end of this wave of interest rate hike cycles, with the rate rising to 4.82% from 4.44% a few days ago.
The Fed raised interest rates for the first time in three years in September, raising the policy rate from 3.75% to 4%. Washer, who took over as chairman in May this year, advocates reducing policy rhetoric and being more responsive to market changes. There will be a low interest rate meeting next year. After he took office, interest rate market volatility increased.
Bitcoin also faces regulatory pressure and capital outflows. With the Democratic Party winning the midterm elections and taking over both houses of Congress next year, the market expects the cryptocurrency industry to be subject to closer scrutiny. Institutional buying has also retreated in the last two weeks. From October 30 to November 11, net outflows from U.S.-listed Bitcoin spot ETFs exceeded US$2.5 billion.
Summary FAQ
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The main reason is that US bond yields have risen sharply, suppressing non-yielding assets; Additionally, strong inflation and employment data have made the market more confident that the Federal Reserve will maintain a dovish stance, further hurting Bitcoin’s performance.
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The 2-year government bond yield, which is the most sensitive to Fed policy, rose 38.8 basis points in four trading days to 4.862%, the largest four-day increase since June 15, 2022.
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Bitcoin is affected by regulatory concerns and capital outflows at the same time. The market is worried that cryptocurrency regulations will tighten after the Democratic Party wins the election, and US-listed Bitcoin spot ETFs have seen net outflows of more than US$2.5 billion in the past two weeks.
