Bitcoin Drops Below 28,000 Dollars Amidst Bond Yield Surge – Could a Fed Interest Rate Increase Be Looming?

Crypto News- Early in October, Bitcoin (BTC) made an impressive move, surging past the $28,000 mark, but it retraced by 1.87% and settled around $27,591 recently. This drop coincided with a rise in bond yields, which diminished interest in riskier assets.

Bitcoin Drops Below 28,000 Dollars Amidst Bond Yield Surge – Could a Fed Interest Rate Increase Be Looming?

On Monday, Bitcoin briefly crossed the $28,500 threshold, driven by optimism regarding the adoption of cryptocurrencies. The launch of US Ether futures-based exchange-traded funds (ETFs) added to this sentiment. However, these products failed to generate the same level of enthusiasm as Bitcoin ETFs did in 2021. Cici Lu McCalman, the founder of Venn Link Partners, shared her insights: “The price surge was short-lived, primarily due to the hawkish macroeconomic environment and the increasing US Treasury yields.”

The 10-year US Treasury yield is approaching levels last seen in 2007, indicating expectations of an extended period of high interest rates to combat inflation. This presents challenges for assets like stocks and cryptocurrencies.

Cleveland Fed President Loretta Mester has hinted at a potential Fed funds rate hike later this year, depending on the progress towards the Fed’s dual mandate objectives, including inflation and labor market conditions.

Looking back, the fourth quarter has historically been a positive period for Bitcoin, which has seen a 67% increase in value this year, although it remains below its all-time high of $69,000.

October has typically been a strong month for Bitcoin, with an average 24% increase over the past decade, according to Bloomberg data.

Bitcoin’s dominance in US crypto trading is on the rise, reaching 71% in September. This could be attributed to institutional traders seeking refuge from rising real yields and worsening global risk sentiment, as suggested by Kaiko.

While Bitcoin demonstrated strength with its breakout above $28,000 on Monday, today’s dip below $27,900 indicates that bullish sentiment is not in full control.