Bitcoin Slumps Amid Rising Rates and Strong Dollar

The price of Bitcoin and other cryptocurrencies remains under pressure due to rising interest rates and a strong US dollar, according to Wolfe Research strategists Rob Ginsberg and Reed Harvey. The yield on 10-year UST has been a major factor holding back the crypto market, with Ginsberg and Harvey stating that it is now increasingly difficult to find a sustainable bullish scenario for cryptocurrencies.

The strategists attribute the downward trend in cryptocurrencies to several factors, including interest rates, US dollar dynamics, geopolitical tensions, and inflation. They note that even rising tensions have not helped cryptocurrencies turn upward, and that the return of inflation to the market agenda has not yet become a growth driver.

Wolfe Research expects another decline in Bitcoin, with the price potentially falling below $2,000. The broker also continues to monitor the four-year Bitcoin cycle, suggesting that the bottom may form around October. However, the strategists prefer long positions in shares of companies related to the crypto industry rather than in tokens.

Ginsberg and Harvey point out that rising yields on long-term bonds have traditionally hit riskier assets, but this time the main blow has fallen specifically on Bitcoin and cryptocurrencies. As long as the yield on 10-year US Treasury bonds continues to move toward 5%, this factor is unlikely to disappear quickly.