The second-largest economy in the world has been steadily unloading hundreds of billions of dollars worth of US government-backed securities for more than a decade. New numbers from the U.S. Treasury Department show China’s holdings of Treasury securities have reached a low not witnessed in over 14 years. China was in the process of gradually […]
The post $491,900,000,000 in US Treasuries Dumped by China in a Decade As Country’s US Debt Holdings Hit 14-Year Low appeared first on The Daily Hodl.
A trio of BRICS member nations are unloading billions upon billions of dollars worth of US Treasuries. New numbers from the U.S. Treasury Department show China’s ownership of Treasury securities plunged from $821.5 billion in July to $805.4 billion in August – a decrease of about $16.4 billion. Fellow BRICS member India also pared its […]
The post $18,500,000,000 in US Treasuries Sold by BRICS Trio of China, India and Brazil in One Month appeared first on The Daily Hodl.
Billionaire investor Bill Ackman is issuing a warning, saying that there’s an imbalance between buyers and sellers of US government bonds. In a new CNBC Television interview, Ackman says there are plenty of reasons why the Federal Reserve could make abrupt changes to its benchmark interest rates. According to the billionaire, the US bond market […]
The post Demand for US Debt Facing Worst ‘Technical Environment’ in Our Lifetime, Says Hedge Fund Billionaire Bill Ackman appeared first on The Daily Hodl.
An intriguing chart shows a close relationship between U.S. 10-year Treasurys and Bitcoin halving price rallies.
The relationship between Bitcoin’s price and U.S. Treasury yields has long been considered a strong indicator due to historical data and the underlying rationale.
In essence, when investors turn to government-issued bonds for safety, assets like Bitcoin (BTC), which are considered risk-on, tend to perform poorly.
A noteworthy chart shared by TXMC on X (formerly known as Twitter) makes the argument that Bitcoin halvings have coincided with “relative local lows” in the 10-year Treasury yield. Despite the questionable use of the term “relative,” which doesn’t precisely match a three-month low, it’s still worth examining the macroeconomic trends surrounding past halvings.
#BTC halvings have coincidentally arrived at local lows in treasury yields each of the first 3 times. After these moments, risk assets rose broadly while growth expectations also improved.
— (@TXMCtrades) September 18, 2023
Thus a myopic Bitcoin narrative about supply shocks was born. But it was always macro. pic.twitter.com/KGQ4TMeKWC
First and foremost, it’s important to emphasize that the author asserts that the correlation should not be taken as a “direct causal link between yields and BTC price.” Furthermore, TMXC argues that over 92% of Bitcoin’s supply has already been issued, suggesting that daily issuance is unlikely to be the factor “propping up the asset’s price.”
First, it’s essential to recognize that human perception is naturally inclined to spot correlations and trends, whether real or imaginary.
For instance, during Bitcoin’s first halving, the 10-year yield had been steadily rising for four months, making it challenging to label that date as a pivotal moment for the metric.
One might give some benefit of the doubt since, in fact, leading up to Nov. 28, 2012, yields dipped below 1.60%, a level not seen in the previous three months. Essentially, after the first Bitcoin halving, fixed-income investors chose to reverse the trend by selling off Treasurys, thereby pushing yields higher.
However, the most intriguing aspect emerges around Bitcoin’s third halving in May 2020, in terms of the “relative” bottom of yields. Yields plunged below 0.8% approximately 45 days before the event and remained at that level for more than four months.
It’s challenging to argue that the 10-year yield hit its lowest point near the third halving, especially when Bitcoin’s price only gained 20% in the ensuing four months. By comparison, the second halving in July 2016 was followed by a mere 10% gain over four months.
Consequently, attempting to attribute Bitcoin’s bull run to a specific event with an undefined end date lacks statistical merit.
Related: Bitcoin price at risk? US Dollar Index confirms bullish ‘golden cross’
Therefore, even if one concedes the idea of “relative” local lows on the 10-year yield chart, there’s no compelling evidence that Bitcoin’s halving date directly impacted its price, at least in the subsequent four months.
While these findings don’t align with TMXC’s hypothesis, they raise an interesting question about the macroeconomic factors at play during actual Bitcoin price rallies.
Between Oct. 5, 2020 and Jan. 5, 2021, Bitcoin saw a remarkable 247% increase in its value. This rally occurred five months after the halving, prompting us to question what notable events surrounded that period.
For instance, during that time, the Russell 2000 Small-Capitalization index outperformed S&P 500 companies by a significant margin, with a 14.5% difference in performance.
This data suggests that investors were seeking higher-risk profiles, given that the median market capitalization of Russell 2000 companies stood at $1.25 billion, significantly lower than the S&P 500's $77.2 billion.
Consequently, whatever drove this movement, it appears to have been associated with a momentum toward riskier assets rather than any trends in Treasury yields four months prior.
In conclusion, charts can be misleading when analyzing extended time periods. Linking Bitcoin’s rally to a solitary event lacks statistical rigor when the upswing generally initiates three or four months after the said event.
This underscores the need for a more nuanced understanding of the cryptocurrency market, one that acknowledges the multifaceted factors influencing Bitcoin’s price dynamics rather than relying solely on simplistic correlations or isolated data points.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Several members of the economic alliance known as BRICS are discarding billions of dollars worth of assets backed by the US government. New numbers from the Treasury Department show China is leading the charge, reducing its holdings of US treasuries from $835.4 billion in June to $821.8 billion in July – a decrease of $13.6 […]
The post $18,900,000,000 in US Treasuries Dumped by BRICS Members China, Brazil, India and UAE in One Month appeared first on The Daily Hodl.
BRICS members China and Saudi Arabia are unloading hundreds of billions of dollars worth of US treasuries. New numbers from the Treasury Department show that China trimmed its US treasury holdings from $938.8 billion in June 2022 to $835.4 billion in June 2023 – a decrease of about $103.4 billion in just 12 months. Even […]
The post $114,500,000,000 in US Treasuries Dumped By China and New BRICS Member Saudi Arabia appeared first on The Daily Hodl.
According to the crypto firm Circle Internet Financial, the company is “deepening” its partnership with the world’s largest asset manager Blackrock. Circle disclosed that it has started to transfer USDC reserves into a Blackrock-managed fund that’s registered with the U.S. Securities and Exchange Commission (SEC). Circle Deepens Relationship With the World’s Largest Asset Manager Blackrock […]
The Japanese yen’s exchange rate versus the U.S. dollar recently plunged to its lowest rate in 32 years — 147.66 JPY per dollar. The yen’s latest fall comes less than a month after its slip in September prompted authorities to enter foreign exchange markets for the first time since 1998. Gap Between US Treasuries and […]
On October 13, 2022, Tether Holdings Limited announced that the stablecoin issuer has reduced the company’s commercial paper holdings down to zero. The company has said it would reach this goal for a while now, and Tether says that shrinking commercial paper holdings down to zero “demonstrates Tether’s commitment to backing its tokens with the […]
$500 million of the funds currently collateralizing the Dai (DAI) stablecoin will be reallocated to U.S. Treasuries and corporate bonds in an effort to provide the protocol low risk additional yield.
MakerDAO, the governing body of the Maker Protocol, has taken the first step of its plan to reallocate $500 million of its stablecoin Dai (DAI) collateral reserves into short-term United States Treasuries and corporate bonds.
The decentralized autonomous organization (DAO) voted on Oct. 6 to approve a pilot transaction of $1 million following an executive vote from Maker (MKR) token holders, with the rest of the funds soon to be reallocated following confirmation from the community.
A majority, 80% of the $500 million, will be invested in short-term U.S. Treasuries, with $160 million allocated to the 0-1y US Treasury iShares ETF (IB01), and $240 million invested into the 1-3y US Treasury iShares ETF from BlackRock (SHY).
The final $100 million will be allocated ito investment grade corporate bonds provided by investment management firm Baillie Gifford.
The asset allocation was determined by the MKR holders, with 68,250 MKR representing 57.67% of the total voting pool opting for the 80-20 split.
MakerDAO has pursued the plan as a way to diversify the holdings currently collateralizing DAI, while allowing the DAO to deploy unused funds and provide the protocol with additional yield without significant risk to the DAI peg or the solvency of MakerDAO.
DAI is the stablecoin used by MakerDAO to allow the decentralized finance (DeFi) protocol to lend money to users so that the repayable amount can avoid being subject to the volatility that is often seen within crypto markets.
Most of DAI’s $9 billion collateralization pool is currently made up of USD Coin (USDC), a stablecoin backed by cash and short-dated U.S. treasuries. Additionally, DAI is currently over-collateralized at a ratio of 134.87%.
Related: Ooki DAO members explore options in response to CFTC lawsuit
While fixed-income investments offer a low rate of return, they are traditionally seen as a “safe haven” for conventional investors during bear markets due to their steady income stream, and also because fixed-income investors are reimbursed before equity shareholders in the event of bankruptcy.
Yesterday's announcement pushes DAI in a different direction to recent comments from MakerDAO’s co-founder Rune Christensen on Aug. 27, who recommended the depegging of DAI from USDC and transitioning into a truly decentralized cryptocurrency amid fears of regulatory crackdowns.
