Market analyst MatticusBTC believes that a sharp rise in inflation is associated with a significant easing of the US Federal Reserve's monetary policy in 2020-2021. As a result, the Fed may have no choice but to keep interest rates high. However, this strategy has limitations, especially given the interest burden on US Treasuries.
Rising interest rates create problems for businesses and households, especially if they have to refinance or take out new loans. This typically slows economic growth, which reduces investors' appetite for risky assets. However, by 2024, investors will start to look for other sources of funds to put their money into other than U. S. Treasuries.
Over the past 30 days, gold and #bitcoin have soared to all-time highs, while two-year U. S. Treasuries fell to a nine-month low on April 9. This indicates a lack of investor appetite for bond yields of 4.7 percent as an inflation hedge.
Bitcoin critics believe that the recent drop in the S&P 500 index from an all-time high of 5,265 on March 28 could indicate an impending recession. Given the strong correlation between bitcoin and #the stock market, which has exceeded 80% over the past month, bitcoin prices could initially fall if stock market problems continue.
Despite resistance at the $72,000 level, the #BTC futures and options market is currently showing neutrality. This stability is supported by two key indicators that show a healthy demand for leverage compared to the situation at the end of March. Concerns about excessive leverage are well-founded, especially considering that open interest in BTC futures has reached $34.3 billion.
Open contracts, also known as reverse swaps, contain rates that reset every eight hours. A positive funding rate indicates increased demand for bullish positions.
Data shows a notable peak in the 8-hour funding rate of 0.07% on March 31, which was an annualized weekly rate of 1.5%. However, this rate has been revised to 0.3% per week. The reduced pressure on long positions versus leveraged traders indicates that market dynamics have become fairer, highlighting potential bullish momentum.
This article does not contain investment advice or recommendations.
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