Bitcoin’s Potential Challenges Due to US Bond Yields and Federal Reserve Policies

Bitcoin has experienced an impressive 11% increase in value over the past week, nearing the highs it reached in July. However, some macroeconomic factors could pose challenges for the cryptocurrency’s price trajectory, according to industry experts.

Concerns Raised by Analysts

Yuya Hasegawa, a crypto market analyst at Bitbank in Japan, has pointed out that the rising U.S. bond yields present a potential worry for Bitcoin’s performance in the future. When bond yields rise, they become more attractive to investors compared to volatile assets like Bitcoin, leading to a potential shift of funds from riskier investments to more stable options such as U.S. bonds.

Currently, the yield on 10-year U.S. Treasury notes has been fluctuating between 4.02% and 4.08%, slightly lower than the peak of 4.3% seen in September but still significant enough to draw attention away from cryptocurrencies.

Additional Factors at Play

Aside from bond yields, Hasegawa also highlighted concerns regarding stronger-than-expected retail sales and decreasing jobless claims, which have raised doubts in the financial market about the Federal Reserve’s future rate-cutting strategies.

While there is a possibility that the Fed might not proceed with further rate cuts in November, there is still a likelihood, according to Hasegawa, that the Federal Open Market Committee (FOMC) will implement a 25 basis points cut following its upcoming meeting.

Market sentiment aligns with this perspective, with approximately 91% of traders anticipating another rate cut by the Federal Reserve after the next meeting, reflecting a consensus that aligns with Hasegawa’s analysis.

Market Dynamics and Potential Breakout

Despite these challenges, recent actions by the European Central Bank to reduce key interest rates by 25 basis points could provide a positive boost to Bitcoin’s price in the short term. This move is expected to enhance liquidity in the markets, potentially benefiting risk assets like Bitcoin.

Valentin Fournier, an analyst at BRN, is optimistic about Bitcoin’s outlook, citing strong ETF inflows and favorable macroeconomic conditions as catalysts for a potential price surge. Fournier believes that if Bitcoin maintains its current momentum, it could reach $70,000 by the start of the week, signaling a crucial test for the cryptocurrency’s value.

Disclaimer: Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.

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