Bitcoin’s dizzying high shows no signs of slowing, despite the rise in U.S. government bond yields.
The cryptocurrency market leader set a new lifetime record of $ 51,348 on Wednesday morning, having penetrated the psychological level of $ 50,000 on Tuesday for the first time, according to data from CoinDesk 20. Prices rose 53% this month only.
The latest bullish move came in the wake of an announcement by publicly traded company MicroStrategy that it plans to increase its stock of bitcoin once again. The company announced a $ 600 million debt sale on Tuesday, which will finance additional purchases. The business intelligence company has been buying bitcoin since August 2020 and has a profit of more than $ 2 billion in its holdings.
According to Avi Felman, head of trading at BlockTower Capital, MicroStrategy’s announcement may have been timed to force a break above the critical $ 50,000 level. The company made a similar announcement on December 7, after which bitcoin crossed the then-large $ 20,000 barrier.
It remains to be seen whether the most recent move above $ 50,000 is sustainable, given that US bond yields are rising and pushing gold down. Bitcoin is widely considered a protection against inflation like gold.
The yield on the 10-year Treasury note rose 1.33% in 12 months today and rose more than 20 basis points this year. Gold is currently trading at a two-week low of $ 1,790 per ounce. Bitcoin, however, is showing resilience and can come under pressure if and when real or inflation-adjusted yields increase.
As of Tuesday, the 10-year bond yielded -1% in inflation-adjusted terms, according to data provided by the U.S. Treasury Department.
“Momentary funds that bought bitcoin as a hedge against inflation can sell if real yields increase,” Felman told CoinDesk.
Perceived value reserve assets normally move in the opposite direction to the real yields on the securities. For example, gold rose more than $ 600 to a record price of $ 2,075 in the five months to August, with the US 10-year real yield falling from 0.55% to -1.08%. Bitcoin has seen an impressive recovery in the past 11 months, along with a continued drop in yields.
However, yield increases may be limited, with the Federal Reserve running an open bond buying program and inflation is likely to increase as oil prices soar.
To date, bitcoin is trading around $ 50,946, up 3.6% in 24 hours.