Bitcoin And Crypto Register Pullback as Us Bond Yields Rise

• The surge in the 10-year US Treasury yield to the highest levels since 2007 has dented the sentiment for Bitcoin investments.
• Ethereum futures ETF launch failed to garner enough interest but analysts are hopeful about a positive Q4 for Bitcoin.

After a strong start to the month of October, the Bitcoin (BTC) price has failed to hold the $28,000 level. As of press time, Bitcoin is trading at 2.82 percent down at a price of $27,480.

The recent price dip in Bitcoin comes amid the surge in the US bond yields that have dented the demand for riskier investments. The 10-year US Treasury yield is approaching levels last seen in 2007, indicating rising anticipations of an extended period of elevated Federal Reserve interest rates to combat inflation. These tighter financial conditions pose challenges for both stocks and cryptocurrencies.

Monday was a mixed bag for Wall Street investors following the weekend’s congressional action to avert a government shutdown with a temporary bill. Meanwhile, interest rates continued their ascent, with the U.S. 10-year Treasury yield surging by another 11 basis points to reach 4.69 percent.

This increase in yield was driven by unexpectedly robust manufacturing data, emphasizing the U.S. economy’s resilience. The ISM figures came in at 49, surpassing the forecasted 47.7, which has led to speculation about the possibility of additional rate hikes.

Speaking to Bloomberg, Cici Lu McCalman, founder of blockchain adviser Venn Link Partners said: “The price pop was short-lived as the macro environment is still hawkish on rates. The rise in US Treasury yields weighed on Bitcoin”.

Ethereum Futures ETFs Fail to Generate Interest

Earlier this week on Monday, Bitcoin reached a peak of over $28,500 benefiting from a wave of optimism surrounding increased cryptocurrency adoption following the launch of U.S. exchange-traded funds (ETFs) based on Ether futures. However, these products did not garner as much attention as their Bitcoin counterparts introduced during the digital asset boom of 2021.

Speaking to CoinDesk, Dexterity Capital Managing Partner Michael Safai said:

Even if these ETFs come out, and they don’t massively drive price changes, that’s okay. That’s what assets are supposed to do. They’re not supposed to be all over the room.

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The digital asset industry is preparing for the trial of Sam Bankman-Fried, scheduled for last November’s FTX exchange collapse. Bankman-Fried faces charges of fraud and money laundering, although he has denied them. If convicted, he could potentially face a substantial prison sentence. Jury selection is set to commence on Tuesday, bringing renewed attention to the challenges and risks within the crypto sector.

In its recent research report, Kaiko noted:

Over the past 11 months, crypto trade volume and market depth has hit multi-year lows along with price volatility,” adding “the worst may thankfully be behind us.

Bitcoin Price Expectations in Q4 2023

Bitcoin, after experiencing a 67 percent increase this year, is showing signs of recovery from its 2022 decline, although it remains a considerable distance from its pandemic-era peak of nearly $69,000.

Some observers are finding comfort in historical trends, noting that October has traditionally been a strong month for Bitcoin. Over the past decade, the cryptocurrency has, on average, seen a 24 percent increase in October, according to data compiled by Bloomberg.

Kaiko has reported that Bitcoin is gaining dominance in the US crypto trading landscape, accounting for 71 percent of volumes on American exchanges in September. This surpasses the 66 percent figure observed during the banking turmoil in March. Institutional traders may be shifting towards Bitcoin, possibly due to rising real yields and growing global risk concerns, as noted by Kaiko

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