While the recent sideways trend in the bitcoin market persists, the sharp rise in global bond yields has captured the attention of cryptocurrency investors. Sean Farrell, head of digital asset strategy at Fundstrat, stated that the current volatility of bitcoin is historically quite low, and that much sharper price fluctuations may be observed in the coming months.
According to Farrell's assessment, historically after periods of similarly high bitcoin volatility, a significant acceleration in price movement has been observed. Historical data shows that the median absolute price change of bitcoin over 60-day periods following such conditions was approximately 30 percent.
One of the main concerns for markets has been the rapid rise in global bond yields. The yield on the U.S. 30-year Treasury bond reached its highest level since 2002, the yield on the 20-year bond hit its highest level since 2006, and the yield on the 10-year bond reached its highest level since 2007.
Farrell believes that the growing U.S. budget deficit, high investments in artificial intelligence infrastructure, high oil prices, and uncertainty regarding monetary policy are exerting upward pressure on long-term bond yields.
The sharp fluctuations in the bond market have also sparked discussions about a "panic" scenario affecting the global financial system, involving roughly $1.8 trillion. Analysts believe such a wave of risk aversion could lead to much more significant price fluctuations for highly volatile assets like bitcoin.
The analytical firm Yardeni Research stated that while there is no real panic in the markets yet, they are closely watching to see if bond investors, known as "bond vigilantes," will once again set the direction for market movements.
Analysts at Bitunix noted that investor attention is shifting away from the simple question of whether the Fed will cut interest rates. In the view of the analysts, the yield on long-term U.S. Treasury bonds, energy prices, inflation risks, and the global risk premium are becoming increasingly important factors in pricing risk assets, including bitcoin.
Koinly CEO Robin Singh also stated that the possibility of another sharp decline in bitcoin in the coming months cannot be ignored. According to Singh, under a negative market scenario, bitcoin could fall to around the $50,000 level.
Singh said that if historical market cycles repeat, investors may need to endure one final wave of "panic selling" before it can be confidently said that bitcoin has reached the bottom of the current cycle.
*This is not investment advice.
