Bitcoin fell below $84,000 during Asian trading on Thursday, slipping to $83,200 as the US 10-year Treasury yield reached its highest level since 2007. The 10-year yield closed Wednesday at 5.11%, up from 4.96% the previous day, and reached 5.13% intraday.
Rising Treasury yields offer investors higher returns on government debt and can raise borrowing costs, potentially weighing on Bitcoin and other risk assets. CME attributed the bond selloff partly to stronger US business data and rising oil prices.
James Stanley, senior market analyst for global macro at FOREX.com, noted that "BTC has held up well even with surging rates and a strong USD," while identifying $82,833 as the next level to watch if the pullback deepens.
Federal Reserve Expectations Drive Market Repricing
Market expectations for Federal Reserve action have shifted sharply. Bas Kooijman, CEO and asset manager at DHF Capital, reported that markets now assign around a 70% probability for an October rate hike, up from roughly 55% the previous day. CME Group's Fedwatch tool shows a 75.3% probability of a hike to 4.00-4.25% ahead of the October 28 Federal Reserve meeting.
According to Kooijman, "Resilient labor data or further hawkish signals could extend the rise in yields and support the dollar, while softer figures could prompt traders to scale back expectations of an October move and limit the currency's gains."
An October hike would raise short-term borrowing costs, potentially increasing the cost of dollar-funded leveraged Bitcoin trades.
Treasury Bond Buyback Program
The US Treasury announced a $6 billion ceiling for its Thursday buyback of bonds with roughly 20 to 30 years remaining, part of an expanded program intended to improve liquidity in long-dated debt.
Historical Performance Patterns
Bitcoin has closed September higher for three straight years, gaining 7.35% so far this month. According to CoinGlass data, September historically has the lowest average monthly return at -2.34%, while October has averaged a 19.92% increase. However, October failed to deliver last year, when Bitcoin fell 3.69%.
