US Treasury yields rise rapidly, probability of Fed rate hike rises to 60%, what pressure does BTC face in the short term?

Summary:

The yield on the US 2-year Treasury bond has risen rapidly, and market expectations for a Fed rate hike in September have significantly increased, with the probability of a rate hike reaching around 60%. As short-term interest rate expectations change, the US dollar and Treasury markets have once again become the focus of capital, while risk assets like BTC may also face short-term pressure due to tightening liquidity.Follow the official account "Bit Mango" for daily market analysis, market news, and practical insights.

Rapid rise in 2-year US Treasury yields

Recently, the US bond market has seen significant changes.

After Fed Chairman Kevin Warsh delivered a hawkish speech at the Jackson Hole conference, the yield on the US 2-year Treasury bond rose rapidly, reaching around 4.36% at one point.

The 2-year Treasury typically reacts very sensitively to the Fed's monetary policy expectations for the coming months, so a sudden rise in yields means the market is repricing future interest rate paths.

At the same time, the market's expectations for a Fed rate hike in September have significantly increased.Follow the official account "Bit Mango" for daily market analysis, market news, and practical insights.

Probability of a September rate hike rises to 60%

Previously, the market had a strong expectation that the Fed would keep rates unchanged.

However, Warsh's speech at the Jackson Hole conference clearly changed market sentiment.

He emphasized that inflation is still above the Fed's target of 2%, and stated that if inflation does not show a sufficiently obvious improvement, the Fed still needs to take action.

Subsequently, the market's pricing for a September rate hike jumped from about 35% to nearly 60%.

This indicates that the market has shifted from “expectations of rate cuts” to discussing “whether there is a need for rate hikes.”Follow the official account "Bit Mango" for daily market analysis, market news, and practical insights.

Why are 2-year Treasury yields so important?

Many investors think of the 10-year yield when they focus on US Treasuries.

However, for judging the Fed's short-term policy direction, the 2-year Treasury is often more sensitive.

In simple terms:

The Fed may raise interest rates

↓

Short-term interest rate expectations rise

↓

2-year Treasury yields rise

↓

Attractiveness of dollar assets increases

↓

Market liquidity and risk appetite are affected

This is why the rapid rise in 2-year yields draws attention from the stock and crypto markets.Follow the official account "Bit Mango" for daily market analysis, market news, and practical insights.

BTC begins to face macro pressure

Previously, BTC had just experienced a very strong rally.

The price quickly rose from around $63,000 to over $80,000, and market sentiment noticeably warmed.

However, as expectations for a Fed rate hike have resurfaced, BTC has begun to pull back.

Recent data shows that while expectations for a September rate hike have risen, BTC dipped below $77,000, gold also faced pressure, while the dollar and Treasury yields moved higher together.

This indicates that the market is repricing assets.Follow the official account "Bit Mango" for daily market analysis, market news, and practical insights.

Why do rate hikes affect BTC?

BTC itself does not change directly due to Fed rate hikes.

The real impact is on funding costs and market risk appetite.

When interest rates rise, the yields on cash in dollars and short-term US Treasuries increase, which raises the opportunity cost of holding high-risk assets.

For BTC, this could result in two effects.

First, some funds may shift from highly volatile assets to dollar assets with higher yields.

Second, the cost of market leverage may increase, which could add pressure for high-leverage positions to liquidate.

Thus, expectations for rate hikes typically bring short-term pressure to BTC.Follow the official account "Bit Mango" for daily market analysis, market news, and practical insights.

But a rate hike does not mean BTC is entering a bear market

This also needs attention.

Currently, the market is pricing only an "increased probability of a rate hike," not that the Fed has already decided to raise rates.

The market still needs to wait for key economic data such as employment and inflation.

If future economic data shows a clear decline in inflation, expectations for a rate hike in September may decrease again.

Conversely, if inflation continues to exceed expectations and the probability of a rate hike increases further, BTC and other risk assets may continue to face pressure.

Therefore, the current market is actually trading on “changes in expectations,” rather than already occurring policy changes.Follow the official account "Bit Mango" for daily market analysis, market news, and practical insights.

Next, focus on three key indicators

First, inflation data before the Fed's September meeting.

If inflation continues to be above expectations, the probability of a rate hike may rise further.

Second, US employment market data.

If employment performance is too strong, it may give the Fed more room to maintain tight policies.

Third, the yields on the 2-year and 10-year Treasuries.

If short-term yields continue to rise rapidly, it indicates that the market is still strengthening tightening expectations.

For BTC, the importance of these macro indicators may temporarily outweigh that of pure technical indicators.Follow the official account "Bit Mango" for daily market analysis, market news, and practical insights.

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Follow the official account "Bit Mango" for daily market analysis, market news, and practical insights.

Conclusion

The yield on the US 2-year Treasury bond has risen rapidly, and market expectations for a Fed rate hike in September have also notably increased.

This means that the previous optimistic expectations for loose policies are being challenged.

For BTC, the biggest short-term risk is not a specific price level, but a change in global liquidity expectations.

If the probability of rate hikes continues to increase and the dollar and Treasury yields remain strong, BTC may continue to face adjustment pressure.

However, if subsequent inflation and employment data reduce rate hike expectations, the current market pressure may also alleviate rapidly.

Therefore, BTC investors need to pay particular attention to expectations around Fed policy, not just the price itself.Follow the official account "Bit Mango" for daily market analysis, market news, and practical insights.

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