Fed Liquidity Injections Drive Down US Treasury Yields, But Not Bitcoin Price

Fed Liquidity Injections Drive Down US Treasury Yields

The likelihood of Bitcoin breaking more than  $30,000 soon is diminished by regulatory uncertainty and recent enforcement operations against significant crypto exchanges, but investors remain enthusiastic.

As traders sought protection from the inflation upward pressure, the central bank’s change in policy affected the trajectory of the United States Treasurys. Since last week, the price of Bitcoin has been circling at $28,000, seemingly unaffected by the movement.

In the meantime, on April 3, the interest rate on the 5-year note dropped to 3.50% from 3.70% the week before. The main cause has been the backstop lending program of the U.S. Federal Reserve’s outstanding borrowings of $152.6 billion. The general public’s lack of confidence in banks has also led them to rethink the Federal Deposit Insurance Corporation and how the Fed no longer has control over the trajectory of inflation. The ability of Bitcoin to act as a trustworthy store of wealth in times of need is still up for debate, but the 70% increase year so far makes a strong case.

Investors are Reducing their Cash Holdings

The entire value of money market funds’ assets in the US has reportedly risen to a record $5.1 trillion, according to figures from Bank of America. Additionally, money market funds give a far greater return than banks, according to fund manager & analyst Genevieve Roch-Decter, who claims that investors have removed $1 trillion from banks.

After the March ISM Purchasing Managers Index figures for the United States were revealed, the danger significantly rose.

Under the FUD, Bitcoin Derivatives Traders Didn’t Give up

Whales & arbitrage desks are big fans of the quarterly Bitcoin futures, which normally trade at a little premium to spot markets, meaning that sellers are looking for more money to postpone settlement for a longer time.

Futures contracts should therefore trade at a five to ten percent annualized premium on healthy markets, a condition is known as contango that is not specific to crypto markets. Since March 30th, the Bitcoin futures costly has been circling close to the neutral-to-bearish line, suggesting that professional traders are reluctant to switch to a bullish stance despite the fact that the BTC price is still close to $28,000.

As the baking industry drove the Fed to change its credit-tightening policies, Bitcoin has so far held up admirably. However, Bitcoin isn’t likely to surpass $30,000 as long as big crypto exchanges are surrounded by regulatory uncertainty.



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