Bitcoin Approaching Golden Cross as Treasury Yields Reflect Rate Cuts
The future of Bitcoin and the impact of rising U.S. Treasury yields have been a topic of discussion among experts. CoinDesk reports that the price of Bitcoin is currently trading at $66,523.36, experiencing a 1% decline over the past 24 hours.
However, London-based macroeconomic research firm TS Lombard believes that concerns about potential policy mistakes by the Federal Reserve (Fed) may be exaggerated. Dario Perkins, the managing director of global macro at TS Lombard, suggests that the current outlook does not necessarily indicate a policy error. In a message to clients, Perkins explained that central banks view their policies as tight and are planning to gradually reduce rates. They are prepared to quickly cut rates if employment collapses, or reduce them less if employment recovers.
The recent interest rate cut by the Fed has led to a significant increase in Treasury yields, which represent the risk-free rate. Some analysts have raised concerns that this could divert investment away from riskier markets like cryptocurrencies and technology stocks. However, rising yields may not necessarily indicate a risk aversion, as some have suggested.
Interestingly, historical analysis of yields after rate cuts in non-recessionary scenarios shows that yields tend to strengthen, contradicting the notion that such moves are indicative of economic downturns. Past events, such as the rate cuts in 1967, demonstrate that rate cuts do not always lead to recessions or runaway inflation. Perkins emphasizes that the current situation is different from that time, highlighting the normalization of bond yields after rate cuts.
In the world of cryptocurrencies, Bitcoin is on the verge of forming a Golden Cross, a technical signal that occurs when the short-term moving average crosses above the long-term average. This pattern is often seen as an indicator of potential price increases and has historically marked the beginning of major bull runs.
Disclaimer: The opinions expressed in this article are for informational purposes only and should not be considered as financial or investment advice. Investing or trading cryptocurrencies carries a risk of financial loss.
