Bloomberg strategist explains why 30-year U.S. bonds have a “bullish effect” on Bitcoin


Although Bitcoin (Bitcoin) Falling below $50,000, more and more investors may transfer funds to the Bitcoin and gold markets in the second half of 2021 (H2), Bloomberg Senior Commodity Strategist Mike McGlone asserted on August 23 .

The financial analyst cited the persistently low yield provided by the 30-year U.S. Treasury bill behind his upside analogy.He pointed out that if The rate of return is consistently below 2%, It can enhance the price discovery stage of Bitcoin, and at the same time bring a competitive advantage to traditional safe-haven assets such as gold.

“Unlike the stock market, the old analog value store and the new digital version share a substantial correction,” McGraw Add, Refers to the slight reversal of the Standard & Poor’s 500 Index in the first half of 2021 (first half), which increases the possibility of its correction in the second half of the year.

In turn, it arranges new funds for other markets with great upside potential (such as Bitcoin).

A comparison of the Bitcoin, Gold, and US Bond Indices with the S&P 500 Total Return Index.Source: Bloomberg Intelligence

“The Standard & Poor’s 500 Index rose or fell 10% in 2 hours, providing a simple binomial model,” Wrote Bloomberg analysts in a research report in July.

“If it rises, it will be about three times the annual standard since 1928, and it will push the Bloomberg Galaxy Encryption Index to a one-hour increase of about 80%. If it falls, bond yields may fall. Bitcoin May become the main beneficiary.”

Bitcoin hits a record high

Federal Reserve Unprecedented interference After the market crash in March 2020, interest rates in the bond market fell. Institutional investors who ideally want an annual yield of 5% from the bond market to curb inflationary pressures are now struggling to cope with short-term bonds, some of which have yields below zero.

At the same time, the yields on longer-term Treasury bonds have also fallen to historical lows.This forces investors Find alternatives in the most dangerous part Financial markets-non-debt investments with high returns, such as Bitcoin.

“This is a violation [the 2%] The 2020 threshold precedes the downturn in risk aversion and has laid the foundation for Bitcoin to reach new highs this year,” Bloomberg Research pointed out.

The 30-year U.S. Treasury bond yield and Bitcoin price. Source: TradingView.com

Cone and Jackson Hole

McGlone’s statement on the relevance of bonds and Bitcoin comes as Fed Chairman Jerome Powell prepares to Jackson Hole Summit This week is usually one of the most influential economic events.

The Fed’s efforts to reduce its monthly bond purchase policy of $120 billion are expected to be a major theme during the (virtual) Jackson Hole meeting. Investors will follow Powell’s words to find any clues about how and when the U.S. central bank will begin its reduction plan.

At the July 27-28 meeting, Fed officials Agreed to start unwinding their bond purchases Policies for optimistic prospects for economic growth and the job market.

Despite this, the yield on the 30-year Treasury bond still fell after the news came out. Report surfaced Due to the spread of Covid-19 Delta variants, investors are still anticipating an economic downturn.

Guneet Dhingra, head of US interest rate strategy at Morgan Stanley, said: “Many customers do not particularly understand the trend of the interest rate market, which brings a degree of caution that you would not normally see.” Tell the financial times.

Related: If history repeats itself, a bullish Bitcoin crossover on the weekly chart will draw a BTC price target of $225,000

After the Fed’s August 18th outlook, the price of Bitcoin rose by more than 14%, reaching Three-month high US$50,784.

Bitcoin daily price chart. Source: TradingView.com

Due to profit-taking sentiment, the BTC/USD exchange rate fell below $50,000 on Monday. At its lowest, the bid for the currency pair was $49,369.

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