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Bitcoin Price Prediction as Global Bond Yields Rise

Bitcoin Price Prediction as Global Bond Yields Rise

Last updated 9th May 2022
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The Bitcoin price held steady on Tuesday as investors focused on the rising bond yields. The BTC coin is trading at $42,000, where it has been in the past few days. This brings its total market capitalization to more than $800 billion.

Rising bond yields

Global government bond yields rose substantially as investors started to brace for tighter monetary conditions. In the United States, the ongoing bond sell-off pushed the 10-year bond yield to 1.52%, the highest level in three months. Bond yields move inversely to prices. 

The same trend happened in countries in Europe. In the UK, the 10-year gilt yield rose to 1.022%, up from this week’s low of 0.95%. In Germany, the 10-year bund rose to -0.195%.

The performance of the bond market is mostly because of the relatively bullish statements by several central bank officials. 

Last week, the Bank of England (BOE) left interest rates unchanged and signalled that it will start tapering soon. This taper could happen soon as higher energy prices will likely translate to faster-than-expected inflation.

In the same week, the Federal Reserve left rates intact but signalled that they will rise by about 7 times in the coming three years. It also signalled that it will start tapering in 2022.

The rising bond yields are usually bearish catalysts for risky assets like Bitcoin and technology stocks. Indeed, futures tied to the Nasdaq 100 index have dropped by more than 1.75%. This is in contrast to the Dow Jones and S&P 500 decline of 0.40% and 0.75%. 

The Bitcoin price is also falling as investors reflect on the looming showdown in Congress. Republicans have refused to support a debt ceiling measure, meaning that the country could default on its debt. Such a default would make the cost of borrowing in the US relatively higher.

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Bitcoin price prediction

The daily chart shows that the Bitcoin price has been under intense pressure in the past few weeks. The BTC has declined by more than 20% from its highest level this month. Notably, the 25-day and 50-day exponential moving averages (EMA) are making a bearish crossover pattern.

Another notable thing is that Bitcoin is forming what looks like a bearish pennant pattern. In price action analysis, this pattern is usually a bearish signal. Therefore, there is a likelihood that Bitcoin will decline and retest the key support level at $40,000.

Bitcoin Price
Crispus Nyaga

Crispus Nyaga

Crispus is a financial analyst with over 9 years in the industry. He covers cryptocurrencies, forex, equities, and commodities for some of the leading brands. He is also a passionate trader who operates his family account. Crispus lives in Nairobi with his wife and son.