Bitcoin Hits New High Above $51K, Shrugging Off Rising Bond Yields
Bitcoin’s dizzying bull run is showing no signs of slowing down despite an uptick in U.S. government bond yields.
The cryptocurrency market leader set a new lifetime high of $51,348 early Wednesday, having penetrated the psychological level of $50,000 on Tuesday for the first time, according to CoinDesk 20 data. Prices have risen by 53% this month alone.
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The latest move higher comes on the heels of an announcement by public listed company MicroStrategy that it plans to boost its bitcoin stash yet again. The firm announced a $600 million debt sale on Tuesday, which will fund the additional purchases. The business intelligence firm has been buying bitcoin since August 2020 and is sitting on a profit of more than $2 billion on its holdings.
According to Avi Felman, head of trading at BlockTower Capital, MicroStrategy’s announcement may have been timed to force a break above the critical level of $50,000. The firm made a similar announcement on Dec. 7, following which bitcoin crossed above the then major hurdle of $20,000.
It remains to be seen if the latest move above $50,000 is sustainable, given that U.S. bond yields are rising and pushing gold lower. Bitcoin is widely considered a hedge against inflation like gold.
The yield on the 10-year Treasury note clocked a 12-month high of 1.33% early today and has risen by over 20 basis points this year. Gold is currently trading at a two-week low of $1,790 per ounce. Bitcoin, however, is showing resilience, and may come under pressure if and when real or inflation-adjusted yields rise.
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As of Tuesday, the 10-year bond was yielding -1% in inflation-adjusted terms, according to data provided by the U.S. Department of the Treasury.
‘”Momentum funds who bought bitcoin as a hedge against inflation might sell if real yields rise,” Felman told CoinDesk.
Perceived store-of-value assets typically move in the opposite direction to real bond yields. For instance, gold rallied more than $600 to a record price of $2,075 in the five months to August, as the U.S. 10-year real yield fell from 0.55% to -1.08%. Bitcoin has charted a staggering rally over the past 11 months alongside a continued drop in yields.
However, yield rises may be limited, with the Federal Reserve running an open-ended bond purchasing program and inflation likely to get a lift from rising oil prices.
At press time, bitcoin is trading around $50,946, up 3.6% in 24 hours.
Also read: Tesla’s Bitcoin Buy May Lead to Widespread Corporate Adoption
Related: Coins Marketcap