Bitcoin’s Fed cut trade flips as bond market turns into the risk
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Bond traders are now pricing in a Fed rate hike this year, while stocks are moving sharply against Treasury yields, a macro shift that threatens Bitcoin’s liquidity-driven recovery.
Key facts
The Fed keeps its options open without validating June hike expectations, CME hike odds fall below 40%, and the 10-year retraces toward 4.4%
Reports noted that the two-month correlation between US equities and the 10-year Treasury yield fell to -0.70, the lowest reading since 1999
Bitcoin lost the $76,000 footing on May 22, a move tied to US-Iran uncertainty and the repricing of Fed rate expectations
On May 22 that bond traders are fully pricing in a Fed interest rate hike by year-end, with interest rate swaps implying the Fed's benchmark rate at least 25 basis points higher by the end of 2026
Summary
On May 22 that bond traders are fully pricing in a Fed interest rate hike by year-end, with interest rate swaps implying the Fed's benchmark rate at least 25 basis points higher by the end of 2026. The same day, Fed Governor Christopher Waller said the Fed should remove its easing bias and called rate cut talk “crazy” as inflation held above target and the labor market stayed stable. Bitcoin lost the $76,000 footing on May 22, a move tied to US-Iran uncertainty and the repricing of Fed rate expectations.