📊 The relationship between Bitcoin and high-risk bond yields

Over the past decade, a remarkable phenomenon has emerged in the financial markets: As the price of Bitcoin rises, high-risk bond yields falland vice versa. This relationship is not a mere coincidence, but rather reflects a complex balance between global liquidity, monetary policy, and investment sentiment.

🔹 Bitcoin as a symbol of liquidity and risk
Bitcoin is often seen as an alternative asset to hedge against inflation and the weakness of traditional currencies, and sometimes as a symbol of abundant liquidity in the financial system. When capital flows into Bitcoin and its price rises, it reflects the improved risk appetite of investors. This positive mood is not limited to cryptocurrencies, but also extends to high-risk debt instruments, as they become more popular, leading to higher prices and lower yields.

🔹 Repeated historical experiences

• 📈 In 2017: Markets saw a strong rise in the price of bitcoin, coinciding with a drop in US high-risk bond yields.
• 📈 In 2020-2021: With the massive injection of liquidity following the pandemic, Bitcoin rose to record highs above $60,000, while the yields of these bonds fell significantly due to high demand.
• 📉 In contrast, when monetary policy tightening and interest rate hikes began in 2022, the price of Bitcoin fell sharply, while high-risk bond yields rose, confirming the inverse pattern between the two.

🔹 The role of monetary policy
The Federal Reserve's monetary policies are a pivotal factor in this relationship. In periods of low interest rates and ample liquidity, investors look for alternative assets with higher return potential, turning to both Bitcoin and high-risk bonds. But when monetary policy tightens and interest rates rise, liquidity shrinks, Bitcoin prices fall while bond yields rise as risk appetite diminishes.

🔹 A deeper reading of the relationship
The relationship between the two assets does not mean that Bitcoin and high-risk bonds always move in the same absolute direction. Risk and Liquidity Mood is the common factor that determines their performance. Therefore, Bitcoin's movement can be seen as an unconventional indicator of market sentiment, while high-risk bond yields reflect the same trend in a more traditional way.

✅ Conclusion

The inverse relationship between Bitcoin rally and High-risk bond yields fall It is a direct reflection of liquidity flows and changes in investors' risk appetite. Although it is not a constant rule at all times, it is a pattern that has been repeated in more than one time cycle, making it an important indicator to follow the dynamics of global financial markets.

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