Bitcoin Prices Slide as Bond Yields Surge, Inflation Concerns Mount

Bitcoin prices slid sharply on Monday, extending a pullback from their record high above $73,000 as soaring U.S

Bitcoin prices slid sharply on Monday, extending a pullback from their record high above $73,000 as soaring U.S. Treasury yields and fresh data fueling concerns about potentially sticky inflation dampened hopes for aggressive interest rate cuts from the Federal Reserve.

Rising Treasury Yields, Inflation Fears Batter Crypto Markets

Market watchers said the pullback in bitcoin highlights its sensitivity to interest rate moves and heightened expectations for the Fed's next policy moves against a backdrop of climbing Treasury yields, which have weighed on broader crypto markets.

"Bitcoin continues to struggle to hold above its record highs and the entire crypto complex has a difficult time when rates are rising," said Louis Navellier, founder of Navellier & Associates, in a report Monday. Bitcoin was trading near $68,994 Monday afternoon, down 3.3% from its opening price, according to CoinDesk data. The world's largest cryptocurrency hit a record of nearly $74,000 a month ago.

"Since the initial drop this morning, the market has pretty much gone sideways, almost as though it is holding its breath waiting for the rates to settle down," Navellier added.

Fed Rate-Cut Bets Fade

U.S. Treasury yields climbed in early Monday trading as investors reacted to the personal consumption expenditures price index excluding food and energy that was released Friday. The data was in line with expectations but reinforced concerns about a continuing upward trend. Yields, which move opposite to bond prices, extended their gains after the Institute for Supply Management's manufacturing index also rose.

Meanwhile, traders in the fed funds futures market see about a 57% probability of a rate cut by the Fed at its June meeting, little changed from late last week. That has done little to support bitcoin prices.

Bitcoin Price Outlook Uncertain

Despite bitcoin's reputation as a highly speculative asset, analysts say the outlook for further gains may hinge in part on the Fed cutting rates. Historically, bitcoin has rallied during periods when the central bank has eased policy.

However, expectations for aggressive Fed easing have diminished amid rising Treasury yields and growing inflation concerns. That could push more investors into alternative assets offering higher yields, potentially pressuring digital currency prices. Against that backdrop, the path forward for bitcoin remains highly uncertain.