Treasury yields spike, Bitcoin and stocks fall: rate cuts in 2024 unlikely?

(Kitco News, Wed. May 29th, 2024) – Bitcoin (BTC) and the broader cryptocurrency market continued to consolidate in early trading on Wednesday as a spike in the U.S. 10-year Treasury yield to 4.6% put pressure on risk assets and halted an attempt by crypto bulls to push higher.

Stocks sold off in response to spiking bond yields, which happened after a government debt auction underperformed, leading many investors to reexamine the likelihood of interest rate cuts and realize the Federal Reserve will likely need to keep rates higher for longer.

The rise in Treasury yield combined with Tuesday’s stronger-than-expected consumer confidence print has only added to the possibility that there may be no rate cuts in 2024. All eyes are now on Friday’s Personal Consumption Expenditure (PCE) index report to get a better read on the Fed’s thinking when it comes to interest rates.

Data provided by TradingView shows that Bitcoin bulls made an early attempt to overtake resistance at $69,000 but were stopped short below $68,900, at which point bears took control of the price action and dropped King Crypto back down to $67,500.

BTC/USD Chart by TradingView

Analysts have warned that the sideways price action is likely to continue for the foreseeable future, with many saying crypto traders shouldn’t expect a major move until closer to Q3 2024.

Back-to-back straight 10 days of positive inflow into #btc spot ETFs.

Reaccumulation is going on.
2024 Q3 and Q4 will be for bulls.

Every dip is like the last opportunity to grab. pic.twitter.com/dqCpK88srK

— Zia ul Haque (@ImZiaulHaque) May 25, 2024

As noted in the above tweet, positive inflows into spot BTC exchange-traded funds have resumed, with every trading day since May 13 recording a net increase in assets under management, according to data provided by Farsite.

BlackRock’s IBIT continues to be the top performer. The recent streak of inflows enabled IBIT to surpass the Grayscale Bitcoin Trust (GBTC) as the world’s largest exchange-traded fund tracking the price of Bitcoin, according to data provided by the Apollo Bitcoin tracker.

IBIT now holds 288,670 BTC, while GBTC has fallen to 287,450 BTC, down from 617,379 when the ETFs launched in January.

IBIT’s ascent was aided by the purchase of shares by BlackRock’s income and bond-focused funds. Regulatory filings from Q1 show that BlackRock’s Strategic Income Opportunities Fund (BSIIX) acquired $3.56 million worth of IBIT, while its Strategic Global Bond Fund (MAWIX) bought $485,000 worth of the fund.

IBIT now holds $19.82 billion in assets under management, and all U.S.-listed BTC ETFs combined have more than $57.1 billion in AUM.

While the U.S.-listed BTC ETFs have been performing well, the debut of crypto exchange-traded notes (ETNs) on the London Stock Exchange was muted, with only 200 shares traded on Tuesday.

Part of the reason for the slow uptake was the fact that access to the funds is restricted to regulated financial investors, excluding retail traders, which raises questions about the overall demand for these ETNs, especially since European investors have already had access to digital asset ETFs for some time now.

“This is a very odd situation,” said ByteTree analyst Charlie Morris. “No warning or PR. No point except that’s it’s hopefully a starter before retail approval. But these aren’t funds; they are just new share classes of existing German and Swiss Bitcoin ETFs that have been around for quite a long time.”

Data provided by Farsite shows that the Hong Kong-listed spot BTC ETFs have also underperformed, recording a negative net flow of $18.8 million since their launch on May 2. For now, it appears that U.S.-listed spot BTC ETFs are the primary source of demand, and other regions have yet to see notable interest in regulated Bitcoin trading products.

At the time of writing, Bitcoin trades at $67,500, a decrease of 1.13% on the 24-hour chart.

Posted by:

Jack Dempsey, President

401 Gold Consultants LLC

jdemp2003@gmail.com