According to CoinDesk, Bitcoin is currently trading near $66,000, indicating a potential end to a two-month rally as the CoinDesk20 Index signals a broader market weakness. The rates and open interest of crypto futures have also seen a decrease. During the Asian trading hours on Tuesday, Bitcoin managed to hold on to its losses as traders considered the resurgence of Treasury yields and the possibility of the Federal Reserve delaying rate cuts until later this year.
Ether (ETH) was trading above $3,300 at the time of writing, while the CoinDesk 20 (CD20) was down 0.6% to 2,532. The 10-year Treasury note yield reached a two-week high of 4.40% overnight due to persistent inflation and unexpectedly strong manufacturing activity. An increase in the so-called risk-free rate usually triggers a money outflow from risk assets and zero-yielding investments like gold. However, gold remained resilient amid the weak tone in Bitcoin and Wall Street’s tech-heavy index, Nasdaq.
Bitcoin's decline to $65,000 is largely attributed to the recent macro outlook on interest rates and rising Treasury yields, according to Semir Gabeljic, director of capital formation at Pythagoras Investments. He noted that higher interest rate environments typically tend to reduce investor appetite to risk. On Polymarket, bettors have ruled out a rate cut by May and are split 50-50 on whether one will happen in June. Most of the certain money is on it happening in the fall.
The CME Fed Watch tool indicates a 97% chance of rates staying the same after May’s meeting. Data from Coinglass shows that over $245 million in long positions have been liquidated in the last 24 hours, with $60 million in BTC positions getting liquidated. Jun-Young Heo, a Derivatives Trader at Singapore-based Presto, stated that perpetual futures funding rates for most crypto assets are back to 1bps, and global futures open interest decreased by 10 percent overnight, indicating some leveraged long positions are closed. He added that as recent Bitcoin ETF inflows are stagnating and BTC and ETH market prices came below the 20-day moving average, some trend followers would have regarded yesterday’s downturn as the end of a two-month-long rally.