Bitcoin Bounces as Global Bond Yields Ease Slightly

Bond prices across the world have been scaring investors given the huge rise in yields. The US 10 year yield almost hit 5% on Thursday before coming back slightly. Bitcoin has felt the pain over this week as the $BTC price fell to $76,500. With a bounce starting to materialize, will Bitcoin rise as bond yields begin to come back down?

US 10 year bond yield almost hits 5%

Source: TradingView

Higher bond yields are problematic for an economy, as these are the rising interest rates that governments must pay investors in order to get them to buy their bonds so they can fund spending.

The US 10-year yield is the benchmark that the US government heeds when deciding to raise or lower interest rates, so it is critical that the yield stays within certain bounds. 

Looking at the above monthly chart, it can be seen that the price broke out of a pennant and has tapped a descending trendline in force since 2007. If the yield breaks up and beyond this trendline, things can become very serious for the US economy.

UK 10 year yield breaks out and heads for 6%

Source: TradingView

If the US bond yields are in a bad situation, spare a thought for the UK. Now at 5.34%, the UK 10 year bond yield has broken out of an ascending wedge and looks to be heading for 6%. From almost 0% yield in 2020, in the space of only 6 years the yield has rocketed much higher.

Can the current $BTC bounce continue?

Source: TradingView

Rejigging the ascending channel slightly enables the $BTC price to stay within its bounds. The recent descent to $76,500 became the third touch point for the channel, completely validating the pattern. It now remains to be seen if the current bounce will continue, eventually breaking through the small descending trendline, and then heading back to the top of the channel and the key $82K horizontal resistance.

If bond yields continue to rise, this could put the kybosh on a $BTC breakout. In fact, bond yields affect all markets. This would be true for the US stock market as well. We already know that Bitcoin does not usually head higher when the stock market is trending down. That said, perhaps this might change if things get much worse, and Bitcoin’s scarce supply becomes more attractive for those getting out of bonds.

A potential $BTC turn-around point?

Out into the daily time frame it can be observed that the price action within the channel is continuing to evolve. The top and bottom trendlines can be drawn completely horizontally, and the price action appears to fit well. While still not technically a classic bull flag, it is starting to look much more like one than previously.

At the bottom of the chart, the Stochastic RSI indicator lines have now bottomed and a cross-up is trying to take place. Could this be the turn-around point, with an ultimate breakout of the flag and where the price smashes through the key resistance and into an official bull market?

$81,500 by close of play on Sunday for bulls to save the day

Source: TradingView

Be that as it may, the weekly chart brings us back to earth with a dull thud. Given the amount of touch points, it would seem that $77K is the key support to hold. As can be noted, the $BTC price is sitting on that support level right now. 

We also still have the shooting star candle from two weeks ago to contend with. Unless the price can close above the top wick of this candle, it remains a strong signal of a rally top. Throw into the mix that the current candle is enveloping last week’s candle, and we have a recipe for a bearish outcome.

However, all is not lost yet. Momentum could be swinging back to the bulls now that the bottom of the channel has been touched. It just remains to be seen if this momentum will be enough to leave a candle close, midnight on Sunday, that will allow the bulls to extricate themselves. 

What it would probably take, is for the $BTC price to rise and close above the top of the channel (around $81,500) to completely switch back to bullishness. The bulls have less than three days to accomplish this.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.