The collapse of Bitcoin and Ethereum continues as the 10-year US Treasury yield exceeds its June high

Bitcoin (BTC) and Ethereum’s native token Ether (ETH) started the week on a depressing note as investors prepared for a flurry of rate hike decisions from central banks, including the Federal Reserve. and the Bank of England of the United States.

The price of bitcoin fails to hold $ 20,000

On September 19th, the BTC price failed to recapture the $ 20,000 psychological support zone. The BTC / USD pair slid 6.5% to around $ 18,250, while ETH fell 4% to around $ 1,280.

Their grim performance came as part of a broader decline that began in mid-August, in which BTC and ETH wiped out a total of 28% and 37% respectively from their market valuation.

BTC / USD and ETH / USD daily price chart. Source: TradingView

A global rate hike of 500bps in sight?

This week, the Fed and a number of its global counterparts will potentially attack rising inflation by raising interest rates further.

Data compiled by Bloomberg suggests that the US central bank, along with Sweden’s Riksbank, Swiss National Bank, Norway’s Norges Bank, Bank of England and others, will raise combined lending rates by 500 basis points, or 5%. .

Central bank rate decisions in the week ending 24 September. Source: Bloomberg

Risky market assets have reacted negatively to these upcoming policy meetings.

Last week, MSCI’s flagship global equity index, ACWI, which combines developed and emerging market stocks, fell 4.25% to nearly $ 84. At its peak, the index was trading at $ 107. 39 in November 2021. Interestingly, Bitcoin and Ethereum peaked in the same month at $ 69,000 and $ 4,950 respectively.

ACWI Weekly Price Chart. Source: TradingView

Therefore, this growing correlation with the prospect of global rate hikes may continue to push BTC and ETH lower despite their growth-oriented narratives..

Instead, investors can seek safety in low-volatility assets, including the US dollar and government bonds.

For example, the US dollar index, a barometer for measuring the strength of the greenback, rose 0.5% to 110 on September 19 after its highest weekly close since 2002.

Likewise, six-month US Treasuries yield 3.79% when held to maturity, thus offering investors a safer investment alternative with guaranteed short-term returns. Likewise, the 10-year US Treasury yield surpassed its June high as Bitcoin dipped to annual lows.

US Treasury yields as of September 19th. Source: Bloomberg

Other shorter and longer maturity Treasury bills produce similar yields.

Bitcoin at $ 14K– $ 15K, Ethereum at $ 750 later?

A mix of technical and on-chain indicators further suggests an impending price collapse in the Bitcoin and Ethereum markets.

First, the age groups for Bitcoin spent output (seven to 10 years), which keep track of the BTC spent and group them into categories according to their age, showed the movement of more than 5,000 BTC on 4. September. MACD_D, a user of the CryptoQuant chain analytics platform, argues that this is typically bad news for Bitcoin’s price.

“If the holder, who held BTC in the seventh year, moves more than 5,000 BTC, there could be a strong downward trend in the future,” the verified user wrote, noting:

“This indicator has shown signal 7 in the past and has dropped 6 times except 1 (07 Feb ’21). The fact that the long-term holder has moved the BTC means that there will be an unusual price movement in the future.”

Bitcoin spent in outgoing age groups (7-10 years). Source: CryptoQuant

The user also highlighted a recent increase in Ether’s dominance to over 20%, noting that it typically hints at a bubble about to burst. An excerpt reads:

“When #BTC is simply cross, Ethereum’s excessive rise creates a bubble. In particular, if ETH’s dominance rises by more than 20%, it provides good timing to enter the short position.”

Related: Goldman Sachs’ macro bearish outlook puts Bitcoin at risk of plummeting to $ 12,000

From a technical standpoint, Bitcoin has entered the phase of breaking its prevailing “bearish flag” pattern, now observing a sustained decline towards the flag’s profit target of around $ 14,500 in 2022.

BTC / USD daily price chart with bear flag breakdown setting. Source: TradingView

Meanwhile, Ether also came out of a symmetrical triangle. As a result, the price of ETH could fall as low as $ 750 if the bearish continuation pattern occurs weakening techniques also for the ETH / BTC pair.

ETH / USD daily price chart with symmetrical triangle distribution configuration. Source: TradingView

In other words, a 40% drop in the price of ETHs is planned before the end of the year.

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Every investment and trading move carries risk, you should conduct your research when making a decision.