Bitcoin, Ethereum crash continues as US 10-year Treasury yield surpasses June high
Bitcoin (BTC) and Ethereum’s native token, Ether (ETH), started the week on a depressed note as investors braced for a flurry of rate hike decisions by central banks, including the US Federal Reserve and the Bank of England.
Bitcoin price fails to hold $20,000
On September 19, BTC’s price failed to regain the psychological support zone of $20,000. The BTC/USD pair fell 6.5% to around $18,250, while ETH fell 4% to around $1,280.
Their dismal performance came as part of a broader decline that began in mid-August, with BTC and ETH wiping a total of 28% and 37% of their market capitalization, respectively.
A global rate hike of 500 bps ahead?
This week, the Fed and a number of its global counterparts will potentially attack rising inflation by raising interest rates further.
Data compiled by Bloomberg suggests that the US central bank, along with Sweden’s Riksbank, the Swiss National Bank, Norges Bank, the Bank of England and others, will raise lending rates by a combined 500 basis points, or 5%.
The market’s riskier assets have reacted negatively to these upcoming policy meetings.
Last week, MSCI’s flagship global stock index, the ACWI, which combines stocks in developed and emerging markets, fell 4.25% to nearly $84. At its peak, the index traded at $107.39 in November 2021. Interestingly, Bitcoin and Ethereum peaked in the same month at $69,000 and $4,950 respectively.
Therefore, this growing correlation towards the prospect of global interest rate hikes may continue to push BTC and ETH lower despite their growth-oriented narratives.
#Ethereum Mergers that result in disadvantages teach us a valuable lesson.
The global macro environment replaces everything.
If global markets were generally positive, the merger would have resulted in a pump. But it didn’t.
This applies #Bitcoin also.
â Kevin Svenson (@KevinSvenson_) 18 September 2022
Instead, investors can seek safety in low-volatility assets, including the US dollar and government bonds.
For example, the US dollar index, a barometer of dollar strength, rose 0.5% to 110 on September 19 after its highest weekly close since 2002.
Similarly, six-month US Treasuries yield 3.79% if held to maturity, thus providing investors with a safer investment option with guaranteed short-term returns. Similarly, the US 10-year Treasury yield has passed its June high as Bitcoin fell to yearly lows.
Other treasury bills with shorter and longer dates give similar returns.
Bitcoin at $14Kâ$15K, Ethereum at $750 Next?
A mix of on-chain and technical indicators further suggest an imminent price crash in the Bitcoin and Ethereum markets.
First, Bitcoin Spent Output Age Bands (seven-10 years), which tracks spent BTC and groups them into categories depending on their age, showed the movement of more than 5,000 BTC on September 4. MACD_D, a user of the on-chain analysis platform CryptoQuant, claims that this is typically bad news for the price of Bitcoin.
“If the holder, who held BTC in his seventh year, moves more than 5,000 BTC, there could be a strong downward trend in the future,” the verified user wrote, emphasizing:
“This indicator showed signal 7 in the past and fell 6 times except for 1 (07 Feb ’21). The fact that the long-term holder moved BTC means that there will be an unusual price movement in the future.”
The user also highlighted a recent increase in Ether dominance to over 20%, noting that it usually suggests a bubble about to pop. An excerpt reads:
“When #BTC is simply sideways, the excessive rise of Ethereum creates a bubble. Especially if ETH dominance rises by more than 20%, it provides good timing to enter the short position.”
Related: Goldman Sachs’ bearish macro outlook puts Bitcoin at risk of crashing to $12K
From a technical standpoint, Bitcoin has entered the breakdown stage of its prevailing “bear flag” pattern, and is now seeing an extended decline towards the flag’s profit target of around $14,500 in 2022.
Meanwhile, Ether has also broken out of a symmetric triangle. As a result, ETH price could fall towards $750 if the bearish continuation pattern plays out, along with weakening technicals for the ETH/BTC pair as well.
In other words, a 40% ETH price crash is on the table before the end of the year.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trade involves risk, you should do your own research when making a decision.
