Bitcoin fell below $77,000 on Monday in Asian markets as prediction market traders continued to price in a low chance of short-term relief from the Federal Reserve as rising oil prices and U.S. Treasury yields weighed on risk assets.
The move comes as the macro environment has become unfavorable for cryptocurrencies. The yield on the 30-year Treasury note closed at 5.13%, its highest level since 2007, but traders at PolyMarket are projecting a 98% chance of the Fed not moving in June and 94% in July. Yields on 10-year and 2-year Treasuries have also widened their rise since last week, hitting their highest level in 12 months.
This is important for Bitcoin. That’s because it suggests traders don’t expect the Fed to offset tighter financial conditions anytime soon. Higher yields increase the opportunity cost of holding non-yielding assets, such as: $BTC Additionally, speculative assets tend to be weighed down when inflation concerns prompt movements.
On-chain data from Binance Research provided a more complex background. Glassnode data cited by the company shows that around 60% of Bitcoin supply has not moved in more than a year. $BTC Exchange balances are at a six-year low.
Binance Research also flagged the MVRV (market value to realized value) of short-term holders, an indicator of whether recent Bitcoin buyers are making profits or losing money. Currently, the reading is below 1, indicating that new buyers are underwater on average. This could make the market more sensitive to further declines, as investors with losses have less room to absorb further macro-driven declines.
Traders are currently focusing on several triggers this week, including Wednesday’s Nvidia results, Thursday’s U.S. PPI, and further progress on the Clarity Act, a market structure bill being advanced in Washington, Presto Research said.
Nvidia’s (NVDA) role as a center of the AI trade makes it a broader risk indicator, but PPI will give the market new insight into whether inflationary pressures are extending beyond energy.
In the case of cryptocurrencies, the short-term question is whether Bitcoin can remain stable while interest rates rise. Low exchange balances and less active old supply may limit any apparent spot selling pressure. Still, that doesn’t prevent sharp moves if macro traders reduce their risk or recent buyers find themselves in deeper losses.
Therefore, Bitcoin transactions are between two forces. On-chain data shows long-term holders are still largely inactive, and interest rate markets are giving investors less reason to add exposure before the next round of inflation begins.
