Tokyo, Japan – Bitcoin faced losses in Asian trading on Tuesday, hovering around $66,000 as traders analyzed rising Treasury yields and the potential delay of rate cuts by the Fed. Meanwhile, ether was trading above $3,300, with the CoinDesk 20 down 0.6% at 2,532.
The spike in the 10-year Treasury note yield to 4.40% resulted from persistent inflation and strong manufacturing activity, prompting a shift of funds from risk assets like Bitcoin and gold. Despite this, gold remained steady amidst the bearish sentiment in the cryptocurrency market and tech-heavy Nasdaq.
Semir Gabeljic, director of capital formation at Pythagoras Investments, linked Bitcoin’s drop to the macroeconomic outlook on interest rates and climbing Treasury yields. He noted, “Higher interest rates tend to dampen investor risk appetite.”
According to betting market Polymarket, the possibility of a rate cut by May appears unlikely, with speculation divided on a potential cut in June. The consensus leans towards a rate cut in the fall, while the CME Fed Watch tool predicts a 97% chance of rates remaining steady after the May meeting.
Coinglass data revealed over $245 million in long positions liquidated in the past 24 hours, including $60 million in BTC positions. Derivatives Trader Jun-Young Heo of Singapore-based Presto pointed out that perpetual futures funding rates for most crypto assets had returned to 1bps, with global futures open interest decreasing by 10% overnight.
As inflows into Bitcoin ETFs stall and market prices for BTC and ETH drop below the 20-day moving average, trend followers may interpret the recent downturn as the conclusion of a two-month rally. This shift indicates a potential change in sentiment within the market.