Bitcoin rose slightly on Monday, reaching $83,327, an increase of 0.6% over the past 24 hours, according to CoinGecko data. However, this asset still fell by 2.9% over the past week.
Senior Market Analyst BJW_KEEP_00002 told BJW_KEEP_00001 to BJW_KEEP_00003 that Bitcoin is "struggling against an increasingly challenging macroeconomic backdrop."
She said, "Rising energy prices have reignited concerns about inflation, driving up yields on U.S. Treasury bonds and strengthening the dollar, as investors are re-evaluating the Federal Reserve's interest rate path. Although Bitcoin is seen as a potential alternative to value storage, recent price trends indicate that investors still regard Bitcoin primarily as a risky asset, rather than a reliable geopolitical hedge."
According to CME FedWatch, traders believe that the probability of the Federal Reserve raising interest rates by 25 basis points at its meeting on October 28 is 19.4%, which is lower than 22.1% a week ago and 42.5% a month ago. The forecasting markets Polymarket and Myriad both predict a 17% probability of an interest rate hike. (Disclaimer: Myriad is a forecasting market developed by Decrypt, which is a subsidiary of Dastan.)
The Jade Shi of Bitfire indicates that changes in interest rate expectations should, in principle, provide support for Bitcoin. However, the persistently high yields on long-term U.S. Treasury bonds suggest that the broader financial environment has not truly relaxed. She said that this also explains why Bitcoin, although performing strongly, has not yet clearly broken through its resistance levels.
According to CNBC, the yield on 10-year U.S. Treasury bonds is 5.24%, and the yield on 30-year bonds is 5.60%. Last week, they reached 52-week highs of 5.37% and 5.73%, respectively. James Butterfill, the head of research at CoinShares, wrote on Thursday that these yields have risen to their highest levels in over 20 years.
Butterfill believes that if these yields increasingly reflect concerns about the US public finance, rather than stronger growth, then Bitcoin will begin to "look less like a traditional risky asset and more like an alternative to government-issued currency."
SoSoValue Data shows that US spot Bitcoin ETF recorded a net inflow of $21.13 million last Friday, following net outflows of $487.07 million on Wednesday and $244.13 million on Thursday.
From a technical perspective, Bitfire indicates that Bitcoin is mainly trading between around $80,300 and $87,100. If it breaks through $85,600 with stronger trading volume, it may open up space to rise to $87,395; if it falls below $82,000, it may face the risk of dropping back to $79,000.
Hathorn said, "The recent easing of tensions in the Middle East has provided some respite, but whether the rebound can continue will depend on whether the improvement in market sentiment translates into a more significant decline in bond yields and the US dollar. What the market is now focusing on are the upcoming US inflation data, which could play a decisive role in shaping expectations for the Fed's next steps."
