Some analysts believe that Bitcoin's recent performance is sounding "alarm bells"... Global markets are on pins and needles ahead of the Federal Reserve's interest rate decision and the release of key U.S. inflation data, and Bitcoin investors have particular reason to be wary of potential volatility. Currently, the 30-day correlation between Bitcoin and the U.S. 10-year Treasury yield is -53, one of the lowest values in data compiled by foreign media since 2010. This indicator shows that the largest digital asset is currently moving in the opposite direction of the "anchor of global asset pricing" to an unusual degree. This week, U.S. Treasuries may be hit by inflation data and the Fed's policy outlook. Both major events will occur within 36 hours, and Bitcoin may be "tossed around." Bitcoin fell 3% on Tuesday to a one-week low, hovering around $67,500.
Bitcoin prices hit a record high of $73,798 in mid-March as a large amount of money flowed into spot Bitcoin ETFs, but Bitcoin has struggled to reach new highs in the past three months. For Tony Sycamore, market analyst at IG Australia Pty, Bitcoin's recent failure to break through its historical peak sounded a "wake-up call." Sycamore said: "The lack of upward progress in Bitcoin in recent weeks is worrying, as a large amount of money has recently flowed into ETFs, but it has failed to reverse the situation. The next 36 hours are crucial." Since its launch in January, spot Bitcoin ETFs have had a net inflow of $15.6 billion. According to data collected by foreign media, these products outflowed $65 million on Monday, ending 19 consecutive days of net inflows. The market expects that inflation data due on Wednesday will show that price pressures are still far beyond the Fed's comfort zone. At the beginning of the year, investors bet that the Federal Reserve would cut interest rates aggressively, but now they are arguing about whether the Fed will only ease monetary policy slightly in the future. For speculative assets such as Bitcoin, "higher and longer" borrowing costs may be a challenging prospect. Since the beginning of 2023, Bitcoin has rebounded from a deep bear market and has risen more than four times. Fairlead Strategies LLC technical analyst Katie Stockton said in a research note that based on technicals, Bitcoin's short-term momentum is "neutral," while adding that the long-term outlook is more positive. Anand Gomes, co-founder of derivatives platform Paradigm, said the crypto market "is like an addict that always needs good news to stay afloat, so when there is no news, the path of least resistance is lower."
