Bitcoin Price Continues to Face Pressure from Rising Bond Yields

• Digital assets continue to face pressure from rising bond yields as investors contemplate interest rates and the outlook for Federal Reserve monetary policy.
• Bitcoin experienced a drop around September 19th, trading at around $27,200 before the Fed’s decision on interest rates and the summary of economic projections, or the “dot plot.”
• A stronger dollar and high yields on risk-free U.S. Treasury bonds do not encourage investors to venture into riskier bets like Bitcoin.

Continued Contemplation of Fed’s Monetary Policy and rising U.S. Treasury yields on Tuesday kept Bitcoin under pressure.

Bitcoin Prices Remain Under Pressure on Tuesday

Bitcoin and other cryptocurrencies rose on Tuesday, but, like the stock market, digital assets continue to face pressure from rising bond yields as investors contemplate interest rates and the outlook for Federal Reserve monetary policy.

Bitcoin’s price increased by less than 1% in the past 24 hours, reaching $26,250, and the largest cryptocurrency has remained below $26,000 for the past month, in a range dominated by historically low volatility and trading activity. Bitcoin dropped around September 19th, trading at around $27,200, and soaring U.S. Treasury yields raised concerns.

Hani Abuagla, an analyst at brokerage firm XTB, said, “Weakness in global stock markets and pressure from a strong dollar and rising yields making riskier assets less attractive continue to weigh on the cryptocurrency market.”

A strong U.S. dollar and high bond yields, such as the Dow Jones Industrial Average and S&P 500, are bad news for Bitcoin. A more appealing U.S. dollar and high returns on risk-free U.S. Treasury bonds do not encourage investors to venture into riskier bets like Bitcoin. In recent days, bond yields jumped to levels not seen in over a decade in response to the latest messages from the Fed, suggesting that borrowing costs may stay higher than previously thought.

Low Volumes Amplify the Pressure

Macroeconomic challenges, the summer slowdown, and the characteristic volatility of trading volumes – which have attracted investors in the past – have pushed cryptocurrencies to record lows.

Given the absence of significant catalysts for cryptocurrencies, there seems to be little reason to expect Bitcoin to break out of its recent boring period anytime soon. The planned change in Bitcoin’s supply, known as the “halving,” is scheduled for next year, and the SEC’s decision on spot Bitcoin exchange-traded funds is likely months away.

Matteo Greco, an analyst at digital asset investment group Fineqia, said, “Despite the end of the summer season and the expected restart of typical trading activities, volumes in the digital asset market remain low, both on centralized exchanges and on-chain.” He added:

“Central banks, particularly policies implemented by the Federal Reserve, have redirected capital to less risky investments like government bonds.”

Beyond Bitcoin, Ether, the second-largest cryptocurrency, rose by less than 1% to $1,590. Smaller tokens or altcoins also saw gains, with Cardano rising by less than 1% and Polygon increasing by more than 2%. Memecoins, on the other hand, had a quieter appearance, with Dogecoin and Shiba Inu both trading almost flat.