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Bitcoin bull Anthony Pompliano says higher interest rates in 2022 may have a different impact on BTC’s price than what many analysts initially assumed.
Pompliano, the co-founder of Morgan Creek Digital, tells CNBC in a new interview that BTC could potentially be correlated to a surprising indicator.
“The other thing that I’m watching right now, and I don’t think we have enough data yet, but over the last couple of weeks, I’ve seen a couple of analysts talking about this idea that Bitcoin’s price is actually tracking/correlated to the [U.S.] 10-year Treasury yield.”
Traders track the performance of the 10-year Treasury yield to gauge investor sentiment and appetite for risk.
A rising yield suggests market confidence as investors opt for risk-on assets that generate higher returns. On the other hand, a falling yield indicates market caution as investors flee to Treasury bonds to protect their capital.
Federal Reserve officials have recently indicated they plan to scale back asset purchases and raise interest rates next year in an effort to fight inflation.
Pompliano notes that if the correlation between the 10-year Treasury yield and Bitcoin holds true, such a policy could actually be bullish for Bitcoin.
“So now you would think that most risk assets, as the interest rates get raised, we should see risk assets actually sell off, right? You go all the way back to the ’99 Dot Com Bubble, a lot of people would point to interest rates being a key factor for kind of popping that bubble. But if Bitcoin’s actually going to trade alongside [the 10-Year Treasury Yield] – again we do need more data – if that is true, in some crazy way, raising interest rates could be bullish for Bitcoin.”
Pompliano does note that some of his past predictions haven’t come true. In 2019, he predicted Bitcoin would hit $100,000 by the end of 2021, based on that being about 18 months after the most recent halving in May of 2020.
Explains the trader,
“One of the things I’m watching though is that 18-month timeframe may be off. We may actually be seeing longer bull markets now rather than those 18-month ones we’ve seen before. Time will tell. Hindsight will be 20/20 on that. But I think that’s one thing to watch.”