Higher Bond Yields Contribute to Bitcoin's Extended Losses
Bitcoin losses continued today as bond yields continued to rise, causing concern for investors. This downturn has seen the leading digital currency dip below its two-month low of $26,000 for a loss of 0.74% over the past 24 hours.
The drop in Bitcoin's price comes after a challenging week for the cryptocurrency. Over the past seven days, Bitcoin's price dropped more than 11%. Alongside this, other digital currencies, such as Ether and XRP, have also experienced sizable price decreases.
The increase in US Treasury yields, which are currently at multi-year highs, is a significant factor in the changing market dynamics.
A global trend of selling bonds has emerged due to concerns about stricter monetary policies looking to control inflation. When these policies are in place, there's less money available for investment. This situation can be problematic for investments considered to be riskier, like stocks and cryptocurrencies including Bitcoin.
This week, attention is turned to Jackson Hole, where top central bankers will gather for the Federal Reserve's annual symposium. All eyes will be on the Federal Reserve Chair, Jerome Powell, whose remarks on Friday are eagerly awaited. Investors are keen to understand the future direction of monetary policies.
Tony Sycamore, a market analyst at IG Australia Pty, shared his perspective with Bloomberg: "The market potentially is hoping there is going to be some dovish rhetoric coming out of Jackson Hole." Sycamore added, however, "I don’t think they are going to be dovish."
With the ongoing changes in the market, predictions about Bitcoin's future are varied. Sycamore anticipates that the S&P 500 stock index could see a decrease of 2% to 3% if the 10-year US Treasury yield surpasses 4.33%.
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