Babbitt Observation丨U.S. Treasury yields resume their upward trend, U.S. stocks and gold plunge, where will BTC go?

Overnight, U.S. Treasury yields rose again, U.S. stocks fell, and gold also fell.

On Wednesday, the U.S. Treasury yields rose again, putting pressure on the stock market. The 10-year Treasury yield rose by more than 10 basis points, approaching 1.5% during the day. Industry insiders said that there is usually a certain "seesaw" effect between the U.S. Treasury yields and the stock market. When the U.S. Treasury yields rise, more funds will flow to the bond market to seek risk-free returns, and the stock market will face certain adjustment pressure. Analysts expect that the upward trend of U.S. Treasury yields will continue.

10-year Treasury yield

The three major U.S. stock indexes closed down collectively. Technology stocks suffered another heavy blow, with Amazon falling nearly 3%, Netflix and Tesla falling nearly 5%. As of the close, the Dow fell 0.39% to 31,270.09 points, the S&P 500 fell 1.31% to 3,819.72 points, and the Nasdaq fell 2.7% to 12,997.75 points. Affected by the U.S. stock market, Asia-Pacific stock markets opened lower this morning, with A-shares, Hong Kong stocks, and Japanese and Korean stock markets all falling.

At the same time, New York gold CFD also fell 1.59% yesterday, hitting a 9-month low, closing at $1,709.2 per ounce. Fawad Razaqzada, a market analyst at ThinkMarkets, said: "Gold has once again ignored all other factors, and is only affected by Treasury yields. As Treasury yields continue to rise, the opportunity cost of holding gold is also increasing. Gold needs Treasury yields to start falling and the US dollar to weaken significantly before it can find some support." In fact, from a technical analysis perspective, the US dollar index has also recently formed a double bottom on the daily chart. Once it bottoms out and rebounds, safe-haven assets such as gold will be further under pressure.

US Dollar Index K-line chart

Looking back at the crypto market, yesterday, after Bitcoin surged to around $52,600 in the evening, it did not continue the daytime rise and soon plunged slightly. During the trading hours of the U.S. stock market, Bitcoin showed a slight downward trend as a whole, and did not rise slightly until the Asian session opened in the morning. Looking at the market in recent times, it seems to be a rule that the market crashes in the evening and pulls up in the daytime. The poor performance of the U.S. stock market has become a "drag" on Bitcoin.

After a sharp correction, Bitcoin rebounded this week. So far, Bitcoin has risen by more than 13% this week and has returned to $51,000. Market sentiment is heating up quickly, and the enthusiasm for Bitcoin's new high is very strong. One of the very important supporting factors is the US's $1.9 trillion economic stimulus plan.

Babbitt previously reported that Biden's $1.9 trillion stimulus plan has been passed by the House of Representatives. In fact, the proposal to raise the minimum wage to $15 per hour in the plan is controversial. In the House vote, two Democrats also voted against the proposal for the minimum hourly wage.

The formal debate on the stimulus bill in the Senate this week will begin as early as Wednesday and may last for several days before a final vote. The current ratio of the two parties in the Senate is 50:50. Since no Republican senator supports the bill, Democrats must ensure internal unity to have a chance to pass the bill. Any internal opposition may cause the bill to fail in the end.

According to foreign media reports, in order to quickly advance the $1.9 trillion stimulus plan, the Democratic Party is actively urging the cancellation of the minimum wage proposal. On Monday, active members of the Democratic Party wrote to President Biden and Vice President Harris, calling on them to shelve the proposal on the minimum wage first. The signatory of the joint letter, House Representative Alexandria Ocasio-Cortez, said on Friday: "The choice we should make now is to repeal this proposal that hinders the progress of the stimulus plan." How the stimulus plan progresses is very critical this week.

Also yesterday, US President Biden said that by the end of May, the United States will have enough COVID-19 vaccines for all American adults, two months ahead of his previous goal. With fiscal stimulus and economic recovery, inflation is expected to gradually rise, and we may not be as far away from tightening monetary policy as expected.

The time to test Bitcoin is coming.