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Upside Elusive for Bitcoin as Yellen Says Fed Rate Hike a 'Plus'
Yellen's rate-hike comments and lingering China regulatory concerns dominate market sentiment.
Updated Sep 14, 2021, 1:07 p.m. Published Jun 7, 2021, 9:32 a.m.
Bitcoin struggled to rise as U.S. Treasury Secretary Janet Yellen kept the market from cheering El Salvador's plans to adopt the leading cryptocurrency as legal tender.
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In a taped announcement on Saturday, El Salvador President Nayib Bukele said he plans to submit legislation that will make bitcoin legal tender. The announcement lifted investor sentiment, with some calling a potential adoption at the government level a major bullish development.
However, the cryptocurrency remains locked well within Saturday's trading range of $34,900 to $37,900. At press time, bitcoin is changing hands near $36,200, according to the CoinDesk Bitcoin Price Index, up 1% on the day.
China's regulatory crackdown and U.S. Treasury Secretary Janet Yellen's latest comments on interest rates could be capping the gain.
Also read: Bitcoin, Other Cryptos Fall After Weibo Blocks Rekindle Fears of China Crackdown
On Sunday, Yellen told Bloomberg that President Joe Biden's $4 trillion spending proposal would be positive for the country, even if it leads to a rise in interest rates. "If we ended up with a slightly higher interest rate environment, it would actually be a plus for society's point of view and the Federal Reserve's point of view," Yellen said.
A rate increase dilutes the appeal of perceived inflation hedges such as bitcoin and gold.
China stepped up its crackdown on bitcoin trading and mining over the weekend, blocking many cryptocurrency “key opinion leaders” on Weibo. The move comes weeks after China reiterated its long-standing ban on cryptocurrency trading and mining, sending the price of bitcoin lower.
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Coinbase Sees Crypto Recovery Ahead as Liquidity Improves and Fed Rate Cut Odds Climb
The crypto exchange also took note of a so-called AI bubble that continues to go strong and a weaker U.S. dollar.
What to know:
- Coinbase Institutional is seeing a potential December recovery in crypto, citing improving liquidity and a shift in macroeconomic conditions that could favor risk assets like bitcoin.
- The firm's optimism is driven by rising odds of Federal Reserve rate cuts, with markets pricing in a 93% chance easing next week, and improving liquidity conditions.
- Several recent institutional developments, including Vanguard's crypto ETF policy reversal and Bank of America's greenlighting of crypto allocations, have contributed to bitcoin's rebound from recent lows.
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