The world’s largest crypto coin, Bitcoin, has had highs and lows throughout 2021. Bitcoin prices will be a hot topic in 2022, as the crypto coin has been on a downward trend since peaking at $42,000, due to various factors.
The flagship cryptocurrency experienced popular adoption and three new all-time highs last year, but the price has now fallen below $48k. As a result of the situation, the price of the most popular altcoins has plummeted.
Higher Interest Rates A Boon for BTC?
Higher interest rates in 2022, according to Bitcoin bull Anthony Pompliano, may have a different influence on BTC’s price than many analysts initially predicted.
In a new interview with CNBC, Pompliano, the co-founder of Morgan Creek Digital, claims that BTC could be linked to an unexpected indication.
“The other thing that I’m watching right now, and I don’t think we have enough data yet, but over the last couple of weeks, I’ve seen a couple of analysts talking about this idea that Bitcoin’s price is actually tracking/correlated to the [U.S.] 10-year Treasury yield.”
The performance of the 10-year Treasury yield is used by traders to evaluate market sentiment and risk appetite.
Investors choose riskier investments with higher returns, thus a growing yield indicates market confidence. A dropping yield, on the other hand, shows market caution as investors seek safety in Treasury bonds.
In an effort to combat inflation, Federal Reserve officials have stated that they expect to reduce asset purchases and boost interest rates next year.
Pompliano points out that if the 10-year Treasury yield and Bitcoin have a positive correlation, such a strategy may potentially be good for Bitcoin.
He further said, “But if Bitcoin’s actually going to trade alongside [the 10-Year Treasury Yield] – again we do need more data – if that is true, in some crazy way, raising interest rates could be bullish for Bitcoin.”
Pompliano does admit that some of his previous predictions have failed to materialize. He forecasted in 2019 that Bitcoin would reach $100,000 by the end of 2021, around 18 months after the most recent halving in May 2020.
“One of the things I’m watching though is that the 18-month timeframe may be off. We may actually be seeing longer bull markets now rather than those 18-month ones we’ve seen before. Time will tell. Hindsight will be 20/20 on that. But I think that’s one thing to watch.”