Bitcoin (BTC) price drops back to $66K as rising Treasury yields increase investor interest

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Bitcoin (BTC) pared losses during Asian trading hours on Tuesday, trading at around $66,000, as traders digested resurgent Treasury yields and the possibility that the Fed may delay a rate cut until later this year. .

At the time of writing, Ether (ETH) rose above $3,300, while the CoinDesk 20 (CD20) fell 0.6% to $2,532.

The yield on the 10-year Treasury note rose to a two-week high of 4.40% overnight on persistent inflation and unexpectedly strong manufacturing activity. Increases in the so-called risk-free rate typically lead to an outflow of funds from risky assets and zero-yield investments such as gold. However, the yellow metal remained resilient amid a weak trend in Bitcoin and Wall Street’s tech-heavy index, Nasdaq.

“Bitcoin moved down to $65,000, mainly due to the recent macro outlook on interest rates and rising Treasury yields,” Semir Gabeljic, director of capital formation at Pythagoras Investments, said in an email interview. “A high interest rate environment generally reduces investors’ appetite for risk.”

On Polymarket, speculators have ruled out a rate cut until May and are split 50-50 on whether it will happen in June. Most of this is happening in fixed money decline.

The CME Fed Watch tool has a 97% chance of rates remaining unchanged after the May meeting.

CoinGlass data shows that over $245 million in long positions has been liquidated in the last 24 hours, with $60 million in BTC positions resold.

Jun-Young Heo, derivatives trader at Singapore-based Presto, said, “Perpetual futures funding rates for most crypto assets are back at 1 bps, and global futures open interest decreased by 10 percent overnight, indicating that some “Leveraged long positions are closed.”

“Since Bitcoin ETF inflows have been stagnating recently and BTC and ETH market prices have fallen below the 20-day moving average, some trend followers interpreted yesterday’s downturn as the end of a two-month long rally Will happen,” he continued.

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