Blow to Bitcoin as Key US Yield Hits Feb 2020 High Ahead of FOMC Meeting

News BTC

Key Bitcoin Takeaways

  • Bitcoin sell-off accelerated ahead of the US session as US 10-year Treasury yields hit a fresh 13-month peak.
  • The cryptocurrency’s latest decline appeared ahead of the Federal Open Market Committee’s two-day policy meeting conclusion.
  • Economists believe that the Fed Chairman Jerome Powell would maintain easy-money policies while ignoring intervention in the rising long-dated Treasury yields.

Bitcoin extended its weekly decline on Wednesday as traders’ focus shifted to rising long-dated US government debt yields.

The benchmark cryptocurrency dropped 3.52 percent into the session, hitting 54,992 around London noon. Traders flocked out of the Bitcoin market as Cardano, one of its crypto rivals, offered better intraday prospects. Their sell-off also accelerated as the yield on the US 10-year Treasury note rose to its highest level since February 2020, gaining 0.04 percentage points to 1.67 percent in early Wall Street trading.

Fed Meet

At the core of rising bond yields were expectations that the Federal Reserve would avoid extending its ongoing asset purchasing program below to Bitcoin as Key US Yield Hits Feb 2020 High Ahead of FOMC Meeting to longer-dated government debts. The US central bank officials will conclude its two-day policy meeting on Wednesday, after which its chairman Jerome Powell will take questions at a post-meeting news conference.

How To Get Free Crypto  
5 BTC + 300 Free Spins for new players & 15 BTC + 35.000 Free Spins every month, only at mBitcasino. Play Now!

The Wall Street Journal reported that the Federal Open Market Committee (FOMC) would hold its overnight rates near zero until the US economy secures maximum employment and sustained inflation above 2 percent.

It is less likely for the conditions to reach the Fed’s desired goals this year. Therefore, the central bank will have to continue its policy, including a $120 billion monthly purchase of government debts and mortgaged-backed securities.

Meanwhile, private economists believe that the US will recover jobs this year on the prospects of advancing COVID-19 acceleration and Joe Biden’s $1.9 trillion stimulus package. A survey conducted by the WSJ shows that economists expect the US GDP to grow by 6 percent this year. Should that happen, the Fed would likely taper its easing policies.

Risks Clouding Over Bitcoin Market

Higher interest rates have dealt a blow to Bitcoin lately. The cryptocurrency declines by more than 21 percent in the week ending February 28 after the 10-year note yield rallied. While the Fed will likely ignore intervention, the confusing communication could lead to higher volatility in bonds, stocks, and even cryptocurrency markets.

Coinbase Banner  

“They have not stated exactly the extent of the overshoot they are comfortable with or for how long,” Silvia Dall’Angelo, senior economist at Federated Hermes, told FT. “From a market perspective, this brings uncertainty and volatility.”

A continued sell-off in the US bond market would keep the Bitcoin market prone to wild fluctuations, especially as it has already rallied by almost 1,500 percent since March 2020 and risks undergoing vast bearish corrections. Meanwhile, its growth among corporates as an anti-inflation asset keeps offsetting its downside bias.

Technically, Bitcoin holds its short-term support at the 20-day moving average (the green wave). A breakdown led by rising yields risks putting it en route to the 50-day moving average below. It sits near $47,500 at this press time.

Go to Source
Author: Yashu Gola

Recommended Crypto Services, Products and Strategies:

The first thing any crypto investor needs is is a reliable and secure Crypto Wallet.  Whether you’re looking for an online wallet, hardware wallet, desktop or mobile wallet, Crypto Renegade provides you with all the Best Crypto Wallets in each category.

Best Crypto Wallets Banner

When you’re ready to buy more crypto, or exchange your coins for others, Crypto Renegade’s list of the Best Crypto Exchanges has you covered.  The Crypto Exchanges recommended here offer everything from simplicity and convenience to advanced trading platforms and profit sharing. 

Best Crypto Exchanges Banner

If you want to learn more about the methods and tools that can be used to find Great Crypto Projects, then be sure to check out Crypto Renegade’s strategy for How To Find The Best Cryptocurrency.

Crypto Strategy Banner

For those people that don’t have any money to invest right now, or just want to understand the technology a bit more, you’ll definitely want to check out Crypto Renegade’s Free Crypto Strategy and start collecting Free Coins today!

Free Crypto Banner

What do you think about cryptocurrency? Do you have any questions about it? Be sure to leave a comment below.

This site uses Akismet to reduce spam. Learn how your comment data is processed.