Bitcoin's Surge Amidst US Bond Yields and the Macro Climate

In a week marked by financial turbulence Bitcoin made headlines as it surged past the $34,000 mark on Tuesday. A level not seen since May 2022. This extraordinary rally was driven by a range of different factors including micro and macroeconomic factors, creating a perfect storm for the cryptocurrency. Not to forget the recent announcement of a Bitcoin ETF which brought a lot of hype to the Crypto Currency market.

With the main driver behind Bitcoin's rally involving speculation surrounding the potential launch of a spot BitcoinExchange Traded Fund (ETF). The iShares Bitcoin Trust made a fleeting appearance on the Depository Trust and Clearing Corporation (DTCC). Which are responsible for clearing Nasdaq trades.

Although the news did not guarantee an immediate ETF launch it caused hype and excitement in the market fuelling a bull run in Bitcoin's price.

Eric Balchunas, a renowned Bloomberg Intelligence ETF analyst first broke the news made which sent traders into a frenzy before the listing was withdrawn. Noelle Acheson the former head of research at Genesis Trading and author of the Crypto is Macro Now newsletter said that while this development didn't guarantee the imminent launch of an ETF it provided hope to investors with the possibility causing a market rally.

US BONDS RALLY

Bitcoin wasn’t the only thing on the up with a surge in US bond yields was another influential factor in Bitcoin's remarkable rally. Rising bond yields are not always the best and often unfavourable for Bitcoin because they signal a tightening of monetary liquidity.

This can often negatively impact risk assets like Bitcoin and other Crypto currencies. Not to mention higher yields can cause a diversion of funds away from non yielding assets and strengthen the US dollar. both of which can affect Bitcoin prices as investors can make better returns on other investments.

What was surprising and caught most off guard was that the US 10-year bond yields reached a historic high of 5.02% on Monday. The same time Bitcoin began its bull run. Even when the bond yield did manage to dip to 4.85% on the same day it matched the a surge in Bitcoin's price.

The bond yield also had a positive impact on US stock markets with the Nasdaq Composite and S&P 500 indexes both showing increases of roughly 0.8% and 0.7% on Tuesday. Surprising!

Global Financial Movements

Also impacting price are global movements with the Bank of Japan's upcoming policy meeting. This may have played a role in shaping US equity market moves. Market speculation suggested that the BOJ might increase the limit on the 10-year Japanese Government Bond (JGB) during their upcoming meeting further fuelling bond yield movements upwards and investors should be aware.

There were further signs of an incoming bull market with prices expected to continue to rise due to the actions on centralised exchanges (CEX) surrounding outflows to storage with these moves in the past being linked to market confidence in the price of Bitcoin and other digital assets tipped to rise. The movement is to ensure once liquidity pools dry up or extreme volatility rocks the sector that investors do not have their assets frozen, unable to be used or worse yet, stolen.
Shifting assets away from centralised exchanges and into safe personal ledgers or personal wallets puts them out of harms way from the many issues of collapse centralised exchanges have been experiencing.
As the crypto sector becomes more aware of how it operates more and more people develop strategies to keep their assets safe.
So it looks like we’re heading for another bull run with Crypto Winter possibly over. Investors should be aware that Bitcoin Liqidity pools still remain low which is why many are probably moving their assets away from exchanges. So be careful in the coming Bull and don’t repeat errors of the past.

Image sources provided supplemented by Canva Pro Subscription. This is not financial advice and readers are advised to undertake their own research or seek professional financial services.

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