Bitcoin Price Eyes Rally as $2T Treasury Trade Unfolds—Fed Emergency Rate Cut Bets Soar

Bitcoin (BTC) is up 0.24% today and trades around at $76,481 in the early Asian session after crashing 3.71% on Tuesday. While Bitcoin price slides lower, the US Treasury market is spiraling into chaos, with the 10-year yield rocketing to 4.5% and the 30-year yield hitting 5%. Some speculate this could be a $2 trillion basis trade unwind while others hint it could be China selling treasuries . Regardless of the reason, markets speculate that this could prompt the Federal Reserve to announce an emergency rate cut, which could prompt a buying spree from crypto investors, catalyzing a bullish reversal for Bitcoin’s price . Why The Treasury Market Meltdown Matters for Bitcoin The US President Donald Trump’s trade war with China may have caused the 10Y yields to jump 17.16% from a low of 3.840% to 4.499% in the past 72 hours. In the meantime, BTC is up 2.53% in the last four hours, attempting to undo yesterday’s losses. 10Y Treasury Yield is up 4.50% ZeroHedge called this “absolutely spectacular meltdown” with “ basis trade blowing up , sparking multi-trillion dollar panic .” In a successive tweet, ZeroHedge adds that this is what “the collapse of the $2 trillion basis trade “ looks like. The basis trade unwind is a leveraged forced-selling spiral—when it happens, Treasury prices drop (yields rise) rapidly, even in a risk-off environment where you’d normally expect bonds to rally. This is why Treasuries are losing their safe-haven appeal amid the trade war turmoil. With such a steep climb in long-dated yields, Gold bug Peter Schiff says , “Without an emergency rate cut tomorrow morning and the announcement of a massive QE program, tomorrow could be a 1987-style stock market crash.” Fed Panic Trade Goes Viral: May Rate Cut Odds Soar 500% It is yet to be seen if the Fed will announce an emergency meeting to discuss the treasury yields’ unusual spike. A look at the data shows that markets are already pricing in a rate cut. According to the CME Fed Watch Tool, the probability of a rate cut in May has spiked from 10.6% a week ago to 58.9% today. Fed Watch Tool Fed Rate Cut Probability Bitcoin Price Forecast: Two Scenarios If the Fed sets up an emergency meeting today and cuts interest rates , it could prompt a massive buying spree from investors, catalyzing a recovery rally for Bitcoin’s price and the broader crypto market , putting an end to the ongoing bear rally. The key levels to watch if BTC price rallies include $81,200, $84,150, and $90,000 . A flip of $90K into support level will suggest a shift in paradigm supporting bulls . This development opens the door for a bullish Bitcoin price prediction with a target of $100K and potentially a new ATH . On the other hand, if the Fed holds, there could be more pain for both the stock and the crypto markets with Bitcoin price potentially dipping into the $70K region . The post Bitcoin Price Eyes Rally as $2T Treasury Trade Unfolds—Fed Emergency Rate Cut Bets Soar appeared first on CoinGape .

Source: CoinGape