There has been a dramatic rebound and a subsequent erasure of a large portion of the BTC/USD exchange rate this past week. Nevertheless, the most recent session, which was held on Sunday, managed to be closed just above $45,000, which itself is a level that many would consider has fallen within the supporting area that Bitcoin is known to cap in, as attempts are consistently made in order to stop a total-fledged sell-off.
Still, there had been an increase in the cryptocurrency by nearly 26.3%, which had occurred following a settlement of $58,000, which was also the highest amount recorded towards the end of the third week of February.
Lack of technical support a problem as the interest rate increases
Despite the increase in the cryptocurrency, the interest rate on the ten-year note had increased from 1% at the beginning of the year to just about 1.6% towards the end of last month. This was consequently its highest level recorded in a year as well. This further resulted in the reduction of Bitcoin’s appeal as Bitcoin itself is a non-yielding asset that had already traded at levels that many considered to be overvalued.
The inverse proportion of the yield regarding the ten-year note with Bitcoin does not necessarily signify a negative correlation. Rather, this shows a strengthening of the buying sentiment within the Bitcoin markets which itself resides inside a tested support area. So far, this has resulted in various analysts considering the extension of a sell-off bias to be a validation of Bitcoin’s ongoing correction and also the expectation that it will not last.
Bitcoin’s future remains volatile
Although Bitcoin correlation with the United States stock market has gained strength as of late, the conversation regarding the rising bond yields remains at the centre of attention. As the current pandemic goes on, there have been talks of a vaccine coming out later this year and as such many are hopeful that the economy can get back on track. This has led many to believe that inflation rates are anticipated to increase, which has resulted in a sell-off happening within the bond market recently as well.
Ultimately, the gradual increase in the US bond yields might cause Bitcoin prices to lower even further in the near future. If this happens, the technical support area will be expected to maintain any and all upside bias.