The Intricate Dance Between Bitcoin, Crypto, and Real Yields
The relationship between Bitcoin, crypto, and real yields is complex and significant. While the traditional finance world grapples with shifting real yields, the BTC and crypto market is also affected by these fluctuations.
Key Points:
- The ‘real yield’ refers to the yield on US treasuries adjusted for inflation, which has implications for risk assets like Bitcoin.
- Higher real yields drive investors towards cash and fixed-income assets, leading to a decrease in Bitcoin and crypto prices.
- The trajectory of real yields is determined by inflation and nominal rates, with inflation being the primary driver.
- Longer-dated issuance by the US treasury is putting upward pressure on nominal yields, influencing real yields.
- Falling inflation could result in higher real yields, which is bearish for risk assets like Bitcoin.
Will BTC and Crypto Fall Due to Jackson Hole?
Keith Alan, founder of Material Indicators, draws attention to historical patterns and potential market reactions to the upcoming Jackson Hole event. He highlights the similarities in price movements before Powell’s previous speech and the current scenario but cautions against expecting the same outcome. Investors should be vigilant but not reactive to potential market volatility surrounding the event.
Hot Take:
The relationship between Bitcoin, crypto, and real yields is intricate and influenced by various factors. Investors should closely monitor the trajectory of real yields, inflation, and the actions of the Federal Reserve to make informed decisions in the crypto market.
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