Crypto Crash Risk Rises as Bond Yields Hit 19-Year High

A crypto crash risk remained in focus as long-term government bond yields climbed across major markets. Bitcoin traded around $64,800 on Tuesday, while Ethereum held near $1,915.

Global market pressure also intensified as oil remained above $90 per barrel. Rising yields, weaker risk appetite and uncertain Federal Reserve policy created additional pressure for crypto assets.

Global Bond Yields Are Soaring This Week

There are signs that bond vigilantes are fighting back, pushing yields to the highest level in years. In the US, the 30-year jumped to 5.33%, its highest level in over two decades. The same is happening in other countries. In Germany, the 30-year yield soared to 3.76%, while in the UK, it jumped to 5.8%. All these bond yields were trading at less than 1%.

The rising bond yields is happening as investors push back amid the rising spending by top governments. In the United States, public debt has jumped and is nearing the important milestone of $40 trillion. The same is happening in other countries as they boost their defense spending.

They are also rising because of the ongoing developments in the energy market, where crude oil continues rising. Brent, the global benchmark, has moved above $90 and the West Texas Intermediate is hitting $84. These surges may continue now that President Donald Trump has maintained that no talks were going on between the US and Iran. The WSJ reported that Iran was seeking to escalate because it believes that it has the upper hand.

These developments may have an impact on the crypto market because of the impact on the Federal Reserve, which has maintained high interest rates for a while. At the same time, they may lead to more volatility in the stock and crypto markets as fear spreads.

FOMC Minutes are Coming Up

Meanwhile, traders are reacting to the upcoming Federal Reserve minutes that will be released on Wednesday. These minutes will provide deeper details on what Fed officials talked about in that meeting.

Officials decided to leave interest rates unchanged between 3.50% and 3.75%. Three hawkish officials voted to hike interest rates by 25 basis points, noting that inflation has remained above 2% for years. Hawkish minutes will be risky for Bitcoin and the crypto market.

On the positive side, recent macro data were relatively weak, with the economy losing 23,000 jobs in July. Inflation is also falling a bit, while retail sales had the biggest dip in months, which explains why odds of the Fed hiking interest rates have dropped on Polymarket.

Crypto ETF Outflows Have Continued

Another risk that may lead to a crypto crash is the fact that investors are dumping ETFs this month. While Bitcoin ETFs added $297 million on Monday, they have lost assets in the past few weeks.

Other altcoin ETFs have either had outflows in the past few months or had no inflows at all. That is a sign that demand among institutional investors remains weak, possibly as some of them rotate to the booming stock market, with the S&P 500 and Nasdaq 100 indices sitting at their all-time highs.

Crypto Crash Likely as Bitcoin Price Technicals Point to a Breakdown

Technicals also suggest that the BTC price could crash further in the longer term. On the weekly chart, it has slumped below the 50% Fibonacci Retracement level. Additionally, the coin has remained stuck below the 50 and 100-week moving averages. This performance is a sign that the downward momentum remains intact.

Therefore, the coin will likely continue falling in the near term, potentially to $50,000. Such a move will lead to more downside among other cryptocurrencies.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency markets can experience sharp price movements. Readers should conduct independent research before making financial decisions.