Bitcoin’s Potential Rally is Fueled by Bond Market Trends, Fed Shift

Bitcoin (BTC) might be up for a bull market for the next one to two years, based on an analysis by MN Trading Founder Michaël Van de Poppe. In a recent post on X, Van de Poppe underlines a bearish divergence on the 2-year and 10-year T-bill yields.

He noted, “The Yield chart has inversed and technical indicators don’t lie.”

Also Read: Bitcoin Price : Analyst Says BTC Price Could Reach 200K in Next Crypto Bull Run

Signals for Bitcoin from bond market

Yield inversion typically refers to short-term interest rates becoming higher than long-term rates due to economic uncertainty or a weak growth outlook. He mentions a ‘massive weekly bearish divergence’ on the government bonds, suggesting market pessimism based on the economic numbers.

Van de Poppe suggests that the current yield trends are a response to the monetary policy decisions of the Federal Open Market Committee (FOMC). Now that the tightening practice is over, November’s inflation numbers are good news for the Federal Reserve.

Inflation and tech correlation  

In November, according to Bloomberg data, inflation dipped below the Fed’s annual 2% target for the first time in over three years, as per a six-month annualized metric. This development has uplifted market sentiment during the festive season, with expectations of rate reductions in the coming year.

Fed cuts are generally positive for technology stocks as they lower borrowing costs for the companies. Bloomberg reported in September 2023 that Bitcoin’s price is again moving in sync with tech stocks after briefly breaking that relationship in June. Therefore, all tech advancements and cheaper finance would help spike Bitcoin after a subdued year in terms of price action.

Van de Poppe also notes that a bull market followed a similar yield curve trend in 2018, mirroring the current market trajectory.

Bitcoin halving and potential ETF approval

With favorable macroeconomic factors suggesting a potential Bitcoin bull run, the market is also approaching its halving event in a few months. As of December, Bitcoin’s price has soared to its highest level this year at around $44,000, marking an approximate 160% increase. However, this price remains about 37% lower than its all-time high of $69,000, reached in 2021.

After some initial halving pressure, history shows that Bitcoin’s post-halving gains have been a market reality. Meanwhile, optimism also hinges on the approval of the first Bitcoin spot ETF entering the new year. Crypto commentators expect an influx of retail money if the product hits the market.

However, Bitcoin’s price movement is a complex interplay of economic and regulatory factors. But the overall direction appears promising for the next year or so.

Also Read: Bitcoin at Crossroads: Analyst Eyes $43k Level for Price Direction

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Shraddha’s professional journey spans over five years, during which she worked as a financial journalist, covering business, markets, and cryptocurrencies. As a reporter, she has placed particular emphasis to learn about the market interaction with emerging technologies.

The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.