Key facts
- Bitcoin traded at $83,327 on Monday, up 0.6% over 24 hours.
- The cryptocurrency is down 2.9% over the past week.
- U.S. spot Bitcoin ETFs had $21.13 million in net inflows on Friday.
- Outflows for U.S. spot Bitcoin ETFs were $487.07 million on Wednesday and $244.13 million on Thursday.
- The 10-year Treasury yield was 5.24% and the 30-year yield was 5.60% on Monday.
- Traders see a 19.4% chance of a 25-basis-point Fed rate hike in October.
Bitcoin traded near $83,330 on Monday, showing a modest 0.6% gain over the past 24 hours but remaining down 2.9% for the week. The cryptocurrency has faced headwinds from a challenging macroeconomic environment, according to analysts.
Daniela Hathorn, senior market analyst at Capital.com, noted that rising energy prices have fueled inflation concerns, leading to higher U.S. Treasury yields and a stronger dollar. This environment, she explained, prompts investors to reassess the Federal Reserve's interest-rate path. Despite its reputation as a potential store of value, Bitcoin's recent price action indicates it's still treated primarily as a risk asset rather than a geopolitical hedge.
Traders are pricing in a 19.4% chance of a 25-basis-point rate hike by the Fed in October, a decrease from previous weeks, according to CME FedWatch. Prediction markets Polymarket and Myriad also place the odds around 17%.
Jade Shi at Bitfire suggested that while a shift in rate expectations should theoretically benefit Bitcoin, elevated long-term Treasury yields are preventing a broader easing of financial conditions. This, she said, explains Bitcoin's inability to decisively break through resistance levels.
The 10-year Treasury yield stood at 5.24% and the 30-year yield at 5.60% on Monday, according to CNBC. Last week, these yields reached 52-week highs of 5.37% and 5.73%, respectively. James Butterfill, head of research at CoinShares, noted that these yields are at their highest in over two decades. He argued that if these yields increasingly reflect concerns about U.S. public finances rather than stronger economic growth, Bitcoin could be viewed more as an alternative to government-issued debt.
Digital asset fund flows have slowed, with total inflows since mid-July reaching $11.1 billion, according to CoinShares. U.S. spot Bitcoin ETFs experienced net inflows of $21.13 million on Friday, following significant outflows of $487.07 million on Wednesday and $244.13 million on Thursday, as reported by SoSoValue.
Technically, Bitcoin has been trading within a range of approximately $80,300 to $87,100. A decisive move above $85,600 on increased volume could target $87,395, while a break below $82,000 might lead to a decline towards $79,000. Hathorn added that while the easing of Middle East tensions offers some relief, the sustainability of any rebound hinges on whether improved sentiment translates into lower bond yields and a weaker dollar. Upcoming U.S. inflation data is expected to be a key factor in shaping the Fed's future policy decisions.