Bitcoin (BTC) Recorded an 11% Increase Last Week, Reaching Highs Comparable to Those of July

However, according to some analysts, macroeconomic headwinds might soon disrupt this bullish momentum.

Bitcoin’s 11% surge last week brought it to highs last seen in July. But some analysts now warn that worsening macroeconomic conditions could quickly halt the coin’s bullish momentum.

Rising U.S. bond yields, a threat to BitcoinYuya Hasegawa, a crypto analyst at Japan’s Bitbank, highlighted the worsening conditions in the U.S. bond market. He noted that rising Treasury yields “are a concern for Bitcoin in the immediate future.”

When bond yields are high, they tend to become more attractive than assets deemed risky, like Bitcoin. This scenario could drive investors away from cryptocurrencies and toward U.S. bonds, which offer less volatility.

In mid-October, the 10-year Treasury note yield hovered between 4.02% and 4.08% — a high rate that could serve as a compelling alternative to crypto assets.

Furthermore, recent U.S. economic data came in stronger than expected, reigniting concerns over the Federal Reserve’s monetary policy stance. Strong retail sales and jobless claims had some questioning how quickly the Fed might ease its rate policy.

A rate cut in November still on the tableDespite these worrying factors, Hasegawa noted that there’s still a “decent chance” the Federal Open Market Committee will opt for a 25-basis-point cut when it meets in early November. This view is shared by a majority of traders, with only 9% anticipating the U.S. interest rates will remain unchanged.

The recent decision by the European Central Bank to lower its key rates by 25 basis points could also support the Bitcoin price in the short term. According to Valentin Fournier, an analyst at BRN, “The rate cut should increase market liquidity, which will ultimately benefit the performance of risk assets like Bitcoin.”

Together with the strong inflows into Bitcoin ETFs and the favorable macroeconomic catalysts, there’s potential for a strong price rally. Fournier even suggests that Bitcoin could hit $70,000 by Monday if it avoids a weekend rejection.

While macroeconomic challenges remain, especially with bond yields and the Fed’s policy stance, Bitcoin seems to be benefiting from a largely favorable environment for the time being. However, investors will need to proceed with caution given the potential turbulence that may unfold in the coming weeks.