Bitcoin opened with a mixed bias in New York this Wednesday as traders wobbled between optimistic endorsements from mainstream firms and fears of government bonds sell-off.
The benchmark cryptocurrency rose by up to 9.35 percent during the Asian and European session, hitting an intraday high of $52,666 on Coinbase, a US-based crypto exchange. But it pared a portion of its gains entering the US trade hours, dropping 1.85 percent to test support near $50,000.
The yield on the US 10-year Treasury note surged to 1.48 percent from 1.313 percent on Tuesday as bond sell-off resumed after a shaky session on Tuesday. Yields rise when bond prices fall.
Major risky assets have plunged in recent days, wobbling between losses and gains. Many analysts have expressed worries that additional stimulus measures from President Joe Biden’s administration would lead to a spike in inflation and erode the value of investors’ bond returns.
Concerns about inflation have also prompted bets that the Federal Reserve will boost interest rates in the next two years.
Bitcoin in Bias-Conflict
Investors in the Bitcoin space have not received the prospect of rate hikes well, given the cryptocurrency’s overly bullish performance against the near-zero interest rates in the previous 12 months. The cryptocurrency fell by more than 21 percent last week against the rising bond yields.
Bitcoin retained its upside momentum on Monday as bond sell-off cooled off, only to pare the gains in the next session Tuesday. It picked up on its bullish bias again after Federal Reserve Gov. Lael Brainard clarified that the Fed would not raise rates unless the US economy achieves maximum employment and inflation rate above 2 percent.
“I would be concerned if I saw disorderly conditions or persistent tightening in financial conditions that could slow progress,” she said.
The BTC/USD exchange rate jumped over $52,000 after Ms. Brainard’s comments, its jump further propelled higher by optimistic endorsements for cryptocurrencies from Citibank and Goldman Sachs.
Technically, the Wednesday correction in the Bitcoin market started in the area that in mid-February held bulls from extending their upside bias. The range is between $50,645 and $52,368. Nonetheless, bulls were able to break bullish above it to eventually log a record high at $58,367.
From here, breaking below the resistance range could prompt traders to test $49,000 as their short-term downside target. A further breakdown risks sending prices to mid-$40,000s.