Bitcoin and Ethereum Slide Continues as 10-Year US Treasury Yield Surpasses June Peak

On-chain and technical indicators also point to more pain for Bitcoin and Ethereum in the remainder of 2022.

Bitcoin (BTC) and Ethereum’s native token Ether (ETH) started the week on a depressing note as investors braced for a flurry of rate hike decisions from central banks, including the Federal Reserve. of the United States and the Bank of England.

Bitcoin price fails to hold the $20,000 level

On September 19, the price of BTC has failed to recover the psychological support zone of $20,000. The BTC/USD pair plunged 6.5% to around $18,250, while ETH fell 4% to around $1,280.

Its dismal performance is part of a broader decline that began in mid-August, in which BTC and ETH shed a combined 28% and 37% of their market valuation, respectively.

Is a 500 bp global rate hike coming?

This week, the Federal Reserve and several of its global counterparts will potentially attack rising inflation with a further hike in interest rates.

Data compiled by Bloomberg suggests that the US central bank, along with Sweden’s Riksbank, Swiss National Bank, Norway’s Norges Bank and the Bank of England, among others, will raise lending rates by a total of 500 basis points, that is, 5%.

Central bank rate decisions in the week ending September 24. Source: Bloomberg

Riskier market assets have reacted negatively to these upcoming political meetings.

Last week, MSCI’s flagship global equity index, the ACWI, which combines stocks from developed and emerging markets, fell 4.25% to almost $84. At its peak, the index traded at $107.39 in November 2021. Interestingly, Bitcoin and Ethereum peaked in the same month at $69,000 and $4,950, respectively.

Therefore, this growing correlation against the prospect of global rate hikes could continue to pressure BTC and ETH lower despite their growth-oriented narratives. The negative Ethereum merger teaches us a valuable lesson. The global macroeconomic environment replaces everything.

If global markets were generally bullish, then the Meltdown would have resulted in a trigger to the upside. But it was not like that. This is also valid for Bitcoin. Instead, investors may seek safety in low-volatile assets such as the US dollar and government bonds.

For example, the dollar index, a barometer for measuring the strength of the greenback, rose 0.5% to 110 on September 19, after its highest weekly close since 2002.

Likewise, six-month US Treasury bonds yield 3.79% if held to maturity, thus offering investors a safer investment alternative with guaranteed short-term returns. Likewise, the 10-year US Treasury yield has surpassed its June high, when Bitcoin fell to yearly lows. US Treasury yields as of September 19. Source: Bloomberg

Other shorter and longer duration Treasury bills offer similar returns.

Bitcoin at $14,000 – $15,000, Ethereum at $750 next?

A mix of technical and onchain indicators point to an imminent price crash in the Bitcoin and Ethereum markets.

First, Bitcoin’s Spent Output Age Bands (7-10 years) indicator, which tracks BTC spent and groups them into categories based on their age, showed movement of over 5,000 BTC on September 4. MACD_D, a user of the on-chain analysis platform CryptoQuant, argues that this is usually bad news for the price of Bitcoin.

“If the holder, who had BTC in his 7th year, moves over 5,000 BTC, there could be a strong downtrend in the future,” the verified user wrote, noting: “This indicator showed signal 7 in the past and fell 6 times except once (07 Feb ’21) The fact that the long-term headline has moved BTC means there will be unusual price movement in the future.” The user also highlighted the recent spike in Ether dominance to over 20%, noting that it is usually an indication of a bubble that is about to burst. Extracts:

“When BTC is simply traversing, Ethereum’s excessive rally creates a bubble. Particularly if ETH dominance rises more than 20%, it provides a good time to enter the short position.”

From a technical point of view, Bitcoin has entered the breakout stage of its prevailing “bear flag” pattern, now forecasting a prolonged decline towards the flag profit target of around $14,500 in 2022.

Meanwhile, Ether has also been breaking out of a symmetrical triangle. As a result, ETH price could drop to $750 if the bearish continuation pattern plays out, along with weakening technicals for the ETH/BTC pair as well.

In other words, a 40% ETH price crash is on the cards before the year is out.


Disclaimer: This press release is for informational purposes information does not constitute investment advice or an offer to invest. The views expressed in this article are those of the author and do not necessarily represent the views of infocoin, and should not be attributed to, Infocoin.

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