Key highlights:
- Bitcoin fell to around $83,000, down about 3% in 24 hours
- The 10-year Treasury yield surged to its highest level in almost 20 years
- The 30-year yield also hit its highest level in 22 years
At the same time, open interest also fell almost 6% to $57 billion, Coinglass data showed. When trading volume rises while open interest falls, it means traders are closing out positions rather than placing new bets.
Meanwhile, on Binance, the ratio of large accounts holding long positions on Bitcoin compared to short positions actually rose back above 1, reaching 1.30. This suggests whales may be sitting out the selling.
Weak bond auction pushed yields higher
The spike in yields came after a batch of economic data showed that the U.S. economy is running hotter than expected.
On Wednesday morning, S&P Global reported that its flash U.S. Composite PMI, a survey that tracks business activity, jumped to 58.4 in September from 56.0 in August. That was the strongest reading since July 2021. The survey also found that input costs rose at their fastest pace since October 2022.
Chris Williamson, chief business economist at S&P Global Market Intelligence, shared what this data means for the economy.
“US business continues to boom, with output growing at the fastest rate for over five years in September,” he said. “Firms’ input costs have meanwhile jumped in September at the steepest rate for four years, with fuel and transport costs spiking higher thanks to the rise in oil prices.”
On Wednesday afternoon, the U.S. Treasury sold $70 billion worth of five-year notes at a yield of 5.033%. This was the highest yield at a five-year auction since June 2006.
Notably, the 30-year Treasury yield also followed the 5-year and 10-year notes’ footsteps. It hit 5.37%, its highest level in 22 years, while the 2-year yield climbed to 4.94%, its highest since June 2024.
Federal Reserve Governor Michael Barr told CNBC on Wednesday that more interest rate hikes may still be needed to bring inflation under control. Traders have responded by raising the odds of another rate hike in October to as high as 70%, according to CME Group.
Fed rate probabilities for Oct 28 FOMC meeting. Source: CME FedWatch tool
Source:: Bitcoin Falls to $83K as Treasury Yields Reach Highest Level in Nearly 20 Years