10-Year Yield and Bitcoin Rebound: Coincidence or Correlation?
Key Summary
Bitcoin's recent rebound, 3% from a sub-$80,000 low, has raised questions about the relationship between the 10-year yield and the cryptocurrency's price. The 10-year yield fell 13 basis points, while Bitcoin was back above $82,000, sparking debate about whether the two are correlated or if it's just a coincidence.
Background Context
Past coverage has shown that gold prices are driven by lower yields and haven demand, while a shift in investor sentiment has led to decreased market volatility. Additionally, Bitcoin's one-year volatility has fallen to 43%, now within the range of S&P 500 stocks, suggesting increased confidence in the asset.
Recent Events
Bitcoin rebounded about 3% from a sub-$80,000 low Thursday as the 10-year yield fell 13 basis points. The rebound began hours before Treasury ran a scheduled bond buyback, a program it calls liquidity support. Bitcoin was back above $82,000 by noon in New York, CoinGecko data shows.
Analysis
The 10-year yield fell to a low of 5.06% early Thursday, down 0.13 percentage points. The 10-year yield is now just above 5%. Source: CNBC The Producer Price Index (PPI), a wholesale-price gauge, rose 1.3% in September. That was the biggest monthly gain since March 2022, CNBC reported. Investors sold technology shares for the safety of bonds. US chip stocks had lost $1.64 trillion over six sessions. Wednesday, in contrast, ran the other way. The 10-year hit 5.33% after the September inflation report, and Bitcoin fell about 2% by mid-afternoon. Bitcoin then touched a 24-hour low of $79,806 on Thursday, hours after yields began falling. That matches the large spot bid near $80,000. Did the Buyback Move Bitcoin Before, or Only Once? Treasury said on August 19 it would at least double its long-bond buyback size, and yields fell. Bitcoin’s price rose about 7% that day. BTC has rebounded back above $82,000. Image: CoinGecko Treasury typically runs each operation from 1:40 to 2:00 p.m. ET, its schedule shows. Six hours after the September 10 operation, Bitcoin was 1% lower, per CoinGecko. However, it was 0.4% higher after September 24 and 1.3% higher after October 8. Thursday’s operation accepted $6 billion after Bitcoin had already recovered. Three episodes cannot separate yields from the dollar, tech flows or liquidity. The next tests are the October 27 buyback and Treasury’s refunding on November 4.