The cryptocurrencies decrease in a general way and Bitcoin It is close to US$26,000, about to break its support zone. In the last 24 hours, the leading cryptocurrency falls 1.5% while Ethereum operates at US$1,500.
Bitcoin: what are the factors that pressure its price
1. Delays in the approval of the spot exchange-traded funds (ETFs)
2. The rebound in performance of US treasury bonds caused a decrease in risk appetite.
3. It stopped being a refuge from inflation.
BTC: how the rise in US Treasury bonds impacted
The recent increases in the rTreasury bond accounting 10 years, which have been located in highs not seen since 2007, have completely evaporated risk appetite. Last Friday, the yield on these bonds exceeded 4.5% for the first time in more than a decade, reflecting the scenario of higher interest rates for longer proposed by the Fed. The yield on the 2-year bond It rose more than 2 basis points, to 5.142%, hovering around levels last reached in 2006.
The Treasury securities are considered risk free, since they are supported by the United States Government. The 10-year yield is therefore considered a benchmark risk-free rate of return against which the returns of other assets are compared.
The data clearly reflects this decreased appetite for risk. The risk premium of variable income, The difference between the S&P 500 earnings yield and the 10-year US Treasury bond yield has fallen to -0.58, the lowest level since 2009, according to TradingView data.
Also, the S&P 500 accumulates an accumulated decrease of around 3% so far this quarter. For his part, the bitcoin, which usually takes the performance of this index as a reference, is close to signing some losses notably greater than 10% between July and September. He worse performance of the bitcoin This is explained because, in addition to its greater risk, some experts consider it a leading indicator of the performance of the equity markets.
“Bitcoin is a risky asset that does not generate returns. As such, it will be negatively affected by a high risk-free rate in dollar due to portfolio rebalancing,” says Alex McFarlane, co-founder of Keyring Network. According to this expert, “the idea that we can go ahead ignoring the rates markets and trade BTC as an orthogonal component of the portfolio does not add up unless BTC can offer a risk-free ratesomething it cannot, unlike ‘proof-of-stake’ tokens, like Ethereum).
BTC: why it is no longer a refuge against inflation
Last May, S&P said in a report that, contrary to market belief, it was impossible to prove that the bitcoin was a good inflation shelter. “The 2-year breakeven inflation rate moved into negative territory during the pandemic, when the yield on Treasury Inflation Protection Securities (TIPS) exceeded the yield on Treasury Inflation Protection Securities (TIPS). Treasury bond. The historical correlation between the daily returns of the S&P Broad Digital Market Index (S&P BDMI) and the inflation expectations indices is low, around 0.10,” the manager stated.
Source: Ambito
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