Bitcoin prices plummeted to 12-day lows last Tuesday, extending the double-digit drop from the previous day. The most important cryptocurrency by market value thus reached $ 45, the lowest level recorded since February 11th - after hitting a maximum price of $ 58.332.
Could bitcoin rise again?
Bitcoin has certainly experienced a very positive period, but the correction had to be there, everyone knew it. Especially since the call to use cryptocurrency as a hedge against inflation has been somewhat dampened by the recent rise in yields on the US Treasury rate.
However, the macro-economic picture could soon lead the cryptocurrency into a new bullish trend as analysts think Federal Reserve Chairman Jerome Powell will tell Congress that the central bank is committed to keeping interest rates low.
The US central bank is also likely to continue with its bond purchase program to increase liquidity, despite a recent rise in inflation expectations and improved growth prospects. This will (likely) push bond yields lower and put a cap on both stocks and bitcoin (BTC quote).
Interest rates will remain low
"The recent rise in yields has suppressed some of the risk sentiment, which is inevitable, but I suspect Powell will be on the side of caution, and yields will be lower after his statements." said Denis Vinokourov, head of research at London-based broker Bequant. "In turn, [we expect] risk flows to pick up and support the rise of BTC and with it the rest of the market."
Equity markets came under pressure on Monday as the yield on US 10-year bonds hit a 10-month high of 1,39%, extending the year-to-date gain to over 35 basis points. Risk aversion probably helped drag bitcoin lower. According to CNBC, rising yields could indicate reflation, an expansion of an economy's output level using fiscal or monetary policy, or both. The Fed has been trying to revive the economy since the March 2020 slump and has pumped trillions of dollars into the system to achieve that.
Therefore, the Fed might be expected to raise rates earlier than expected. However, Powell also said the central bank will keep interest rates low for some time.
Put simply, the stimulus for rising inflation is unlikely to be scaled back anytime soon, and the possibility that bitcoin remains in a long-term uptrend remains intact. If you want to know the quotation of bitcoin in real time, we recommend that you visit our page and also find out how to invest and buy bitcoin, via our guide.