The author of this article is Barry, a strategy analyst at NewBloc, with 5 years of experience in foreign exchange and gold market trading.

interest rate

interest rate

With the implementation of Biden's 1.9 trillion stimulus bill, economic activity has strengthened, money demand has increased, and liquidity has tightened. Superimposed Powell said on Thursday that bond purchases will be gradually reduced as the economy recovers, which will make Treasury yields continue to rise in the future. Going higher, now seeing the ten-year government bond yield fall back to 1.6%, the time lag of the 1.9 trillion fiscal effect may see obvious effects in the second half of the year, when the government bond yield may rise to around 2%.

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repatriation of dollars

As the yields of U.S. bonds continue to rise, for some countries such as Turkey, the real interest rate spread continues to widen. Relatively speaking, US dollar assets are favored and capital flees. However, for Turkey, it does not have enough foreign exchange reserves to cover The demand for currency exchange and the run on foreign exchange reserves. In order to ease the pressure, the Turkish central bank chose to raise interest rates. Although this may puncture the local asset price bubble, it won a time window for Turkey, but with the expulsion of the Turkish central bank, this intensified Its demand for foreign exchange, running on foreign exchange reserves, and more funds are awarded locally. When it is difficult to exchange currency, the cryptocurrency market may usher in an increase in demand, which is a positive impact on the cryptocurrency market. The figure below shows the continuous decline of Türkiye's foreign exchange reserves

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tax

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geopolitics

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Deduction

The rise in interest rates may be detrimental to global financial assets in the short term. Global financial assets may trend poorly, and market sentiment is generally pessimistic. In the short term, the price trend of Bitcoin may be affected by the rise in market sentiment and speculative costs. More countries will be subject to the risk of foreign exchange runs, which is good for the price trend of Bitcoin. The tax bill that continues to stimulate the market may continue to stimulate the price of Bitcoin higher. In summary, Bitcoin may rise as the long-term yield of U.S. bonds rises, and the short-term sentiment will be negative for the price trend of Bitcoin.

Note: This article is for analysis only, not as investment advice.