Bitcoin wobbled between gains and losses on Wednesday as traders measured on-chain sell-off signals against the drop in the benchmark bond yields.
The flagship cryptocurrency surged around 0.5 percent to $34,335 ahead of the New York opening bell. It was trading at $35,233 on Coinbase exchange at its intraday high, pointing to bullish attempts to log another bull run towards $40,000.
Bitcoin feels bearish sentiment under $35,000. Source: BTCUSD on TradingView.com
Fundamentals supported a choppy outlook in the cryptocurrency market.
Benchmark Bond Yield Trims Lower
The yield on the US 10-year Treasury note dropped after rising seven days in a row. Its gains appeared amid an auction of new bonds that attracted strong demand from dealers (not investors). They scooped up the majority of $38 billion worth of new government debt, covering 20 percent of the securities. Yields fall as the bond prices rise.
Strong demand at an auction of $38bn of 10-year notes overnight and dovish comments from Federal Reserve officials began to SAP momentum from the recent strong rally in US Treasury yields.Policymakers have played down talk of tapering asset purchases#XAUUSD #GOLD #DXY
— Alice CFA 🎓 (@canduys) January 13, 2021
Bitcoin traded higher as the long-term bond yields remained capped under 1 percent after the March 2020 rout. Traders anticipated that the Federal Reserve’s commitment to purchase government debt to support the US economy would send mainstream investors looking for better returns in the cryptocurrency market.
That somewhat turned true as billionaire investors like Paul Tudor Jones and Stan Druckenmiller, alongside mainstream corporations including MicroStrategy, Ruffer Investments, Square, etc., put their capital into the Bitcoin market. That helped the cryptocurrency emerge as a perceived safe-haven asset.
But with the yield back above 1 percent, especially as the…