Bitcoin collapses to fresh 2-month low pressured by rising yields – Crypto News
August 18, 2023 12:32 pm
The period of prolonged calmness in the crypto sphere has officially come to an end, with Bitcoin posting its biggest daily drop on Thursday since the collapse of FTX in November 2022. For quite some time, cryptocurrencies remained immune to any macroeconomic and idiosyncratic developments, but now they have started to feel the wrath of rising Treasury yields. As global markets have been flooded with risk-off sentiment, Bitcoin slumped to a fresh two-month low amid heightened volatility.
Cryptos cry as yields spike
The last couple of weeks have been harsh for risky assets as a wave of risk-off mood, stemming from concerns over the Chinese economy, has hit global markets. Besides that, there are increasing fears of further interest rate hikes by the Fed as more and more data releases continue to validate the resilience of the US economy.
These developments coupled with the latest hawkish FOMC minutes and the high supply of US Treasuries have pushed yields higher, which in turn inflict additional damage to risk-sensitive assets. Although cryptocurrencies have been relatively unaffected by macroeconomic factors during the summer, it seems that the pullback in equity markets caused by the spike in Treasury yields has finally spilled over to digital assets.
The doom and gloom surrounding cryptocurrency markets in the last couple of daily sessions is clearly reflected in the famous Bitcoin Fear and Greed index, which dropped to 37 its lowest level since March 12. Moreover, rising Treasury yields are applying upside pressure in the US dollar, whose price is inversely related to that of cryptos.
The Musk effect
It is known that crypto markets have often overreacted to any major economic news or sector specific risks due to their relative immaturity and high-risk status. In that sense, Thursday’s selloff coincided with a report from The Wall Street Journal citing that SpaceX, Elon Musk’s privately held firm, has offloaded part or all of its $373 million cryptocurrency holdings.
Elon Musk has a history of triggering moves in the cryptocurrency sphere. In 2021, Bitcoin jumped 15% on a single day when Tesla reported its willingness to start accepting Bitcoin payments. On the contrary, the king of cryptos witnessed severe selling when Musk announced that he is abandoning this plan three months later.
More downside ahead?
From a technical perspective, BTCUSD has lost significant ground in the last couple of daily sessions dropping to its lowest levels in two months before paring back some losses. Hence, for the bulls to regain some confidence, the price needs to reclaim its 200-day simple moving average (SMA).
Should the recent selloff resume, Bitcoin could test $25,350 before the June low of $24,750 comes under examination.
On the flipside, if the price reverses back higher, the bulls could target the $27,000 psychological mark ahead of the $28,550 hurdle.
The period of prolonged calmness in the crypto sphere has officially come to an end, with Bitcoin posting its biggest daily drop on Thursday since the collapse of FTX in November 2022. For quite some time, cryptocurrencies remained immune to any macroeconomic and idiosyncratic developments, but now they have started to feel the wrath of rising Treasury yields. As global markets have been flooded with risk-off sentiment, Bitcoin slumped to a fresh two-month low amid heightened volatility.
Cryptos cry as yields spike
The last couple of weeks have been harsh for risky assets as a wave of risk-off mood, stemming from concerns over the Chinese economy, has hit global markets. Besides that, there are increasing fears of further interest rate hikes by the Fed as more and more data releases continue to validate the resilience of the US economy.
These developments coupled with the latest hawkish FOMC minutes and the high supply of US Treasuries have pushed yields higher, which in turn inflict additional damage to risk-sensitive assets. Although cryptocurrencies have been relatively unaffected by macroeconomic factors during the summer, it seems that the pullback in equity markets caused by the spike in Treasury yields has finally spilled over to digital assets.
The doom and gloom surrounding cryptocurrency markets in the last couple of daily sessions is clearly reflected in the famous Bitcoin Fear and Greed index, which dropped to 37 its lowest level since March 12. Moreover, rising Treasury yields are applying upside pressure in the US dollar, whose price is inversely related to that of cryptos.
The Musk effect
It is known that crypto markets have often overreacted to any major economic news or sector specific risks due to their relative immaturity and high-risk status. In that sense, Thursday’s selloff coincided with a report from The Wall Street Journal citing that SpaceX, Elon Musk’s privately held firm, has offloaded part or all of its $373 million cryptocurrency holdings.
Elon Musk has a history of triggering moves in the cryptocurrency sphere. In 2021, Bitcoin jumped 15% on a single day when Tesla reported its willingness to start accepting Bitcoin payments. On the contrary, the king of cryptos witnessed severe selling when Musk announced that he is abandoning this plan three months later.
More downside ahead?
From a technical perspective, BTCUSD has lost significant ground in the last couple of daily sessions dropping to its lowest levels in two months before paring back some losses. Hence, for the bulls to regain some confidence, the price needs to reclaim its 200-day simple moving average (SMA).
Should the recent selloff resume, Bitcoin could test $25,350 before the June low of $24,750 comes under examination.
On the flipside, if the price reverses back higher, the bulls could target the $27,000 psychological mark ahead of the $28,550 hurdle.
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