Fed suspends interest rates, but Bitcoin options data still points to lower BTC prices

Fed Chairman Jerome Powell announced an interest rate pause, but Bitcoin options data still warns that BTC price drop to $25,000 is possible.

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Bitcoin price has fallen below $26,300 since June 10, reflecting a 14.8% correction in two months. Meanwhile, the Nasdaq tech stock index has gained 13.6% over the same period, indicating that investors aren't exactly fleeing to the safety of cash and short-term debt. In fact, demand for US government bonds has been declining over the past six weeks.

States United States 2-year government bond yield. Source: TradingView

The yield on two-year U.S. Treasuries, for example, rose from 3.80% on May 4 to 4.68% on June 14. Lower demand for debt instruments increases payments, resulting in a higher yield. If the investor believes inflation will continue above target, these participants tend to demand a higher yield when trading bonds.

The US Treasury is expected to issue more than $850 billion in new bills between June and September. As issuing additional debt tends to lead to higher yields, the market expects higher borrowing costs for families and businesses. Still, that doesn't explain why investors flocked to tech companies but shunned Bitcoin (BTC), as the performance of the past two months shows.

Eight straight weeks of crypto outflows

According to the latest “Digital Asset Fund Flow Report” from CoinShares, investment product outflows from the industry totaled $88 million in the week ending June 10. The substantial drop added to the ongoing eight-week release streak, which now totals $417 million.

Eight-week cumulative outflows for Bitcoin hit $254 million, re...