Bitcoin recently concluded its strongest third quarter since 2017. Despite this performance, analysts at Delphi Digital suggest that maintaining the rally remains challenging as US Treasury yields exceeding 5% provide investors with a compelling risk-free alternative to volatile assets.
Market interest is currently driven by the so-called debasement trade, based on the expectation that rising government debt and currency expansion will diminish the purchasing power of the dollar. Vanessa Grellet of Arche Capital notes that this trend persists regardless of interest rate levels, as investors focus on federal deficits.
Bitcoin prices briefly exceeded $87 000 last week before undergoing a correction. The asset has appreciated more than 35% since mid-August, a period coinciding with the US Treasury's decision to increase its long-dated debt buybacks. These buybacks, initially targeting 10- and 20-year notes, have since tripled in scale.
Economic data from the Bureau of Labor Statistics indicates that the US economy added 29 000 jobs in September, significantly lower than the projected 80 000. This cooling labor market has reduced the likelihood of a Federal Reserve rate hike in October, with the CME Group’s FedWatch Tool now estimating the probability at 24%, down from 75% a week prior.
