A bitcoin sign with a graph pictured in the background.
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The price of bitcoin fell slightly on Thursday alongside a bigger pullback in U.S. equities as the benchmark 10-year Treasury yield topped 2% for the first time since 2019.
Bitcoin fell 0.7% to $44,389.63, according to Coin Metrics, after key inflation data showed hotter-than-expected price pressures, sending the 10-year yield higher. It bounced higher earlier in the day but remains off its highs.
At its high, the benchmark yield hit 2.042% on Thursday.
“Bitcoin’s institutional investors are focused on Treasuries as that momentum trade appears to be rather straightforward,” said Edward Moya, senior market analyst at Oanda, adding that the cryptocurrency “seems poised to consolidate between the $40,000 and $50,000 level over the short-term.”
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Tech stocks tend to fall as yields rise, as growth-oriented companies are more likely to give investors higher returns in the distant future rather than the near term.
“Bitcoin prices are holding up nicely given the surge in global bond yields,” Moya said in a note. “Bitcoin’s best environment going forward is risk appetite and that might prove to be difficult until we get past the first couple of rate hikes by the Fed.”
Bitcoin has been trading like equities, and specifically like tech stocks over several months. Institutional investors have taken an interest in the cryptocurrency, and some are trading it as a risk asset. As a result, the crypto has been selling off in tandem with tech stocks, which declined sharply to start the year, despite a rebound in February.
However, its long-term thesis as a store of value or “digital gold” is still alive and well with investors, despite the wave of new institutional interest, which may help explain why the cryptocurrency’s bounce has held while stocks turned lower.
