In a series of thought-provoking insights, Adam Cochran, a respected cryptocurrency expert and the founder of Cinneamhain Ventures, has shared his analysis of the connection between Bitcoin price movements and US Treasury auctions. Cochran’s observations, mainly conveyed through X (formerly Twitter), provide a distinctive perspective on a developing trend in the market, especially concerning the interaction between cryptocurrencies and traditional financial instruments.
Bitcoin Price Rises After Each Treasury Auction
Adam Cochran has identified an interesting pattern: he suggests that a major market maker appears to be closely watching the relationship between real interest rates and Bitcoin, likely in anticipation of ETF investments. According to Cochran, whenever there’s a successful US Treasury auction, which typically results in lower yields and, consequently, lower real interest rates, Bitcoin experiences a price increase shortly after. This trend, in Cochran’s view, indicates that a market maker is betting on significant funds investing in Bitcoin as a hedge against real interest rates.
This observation gains significance in the context of discussions surrounding Bitcoin Exchange-Traded Funds (ETFs). Bloomberg experts believe there’s a high likelihood of a spot Bitcoin ETF receiving approval by the end of the year, partly due to the SEC’s active engagement with applicants like BlackRock and Fidelity. These conversations seem to have intensified the observed correlation, as Cochran notes: “Someone is making the bet that large funds will allocate to Bitcoin as a counter to real rates, which would be significant.”
Cochran also highlights that Bitcoin’s price movements have a notable impact on the broader financial market. He mentions, “The BTC momentum on any upswing is pretty clear, it’ll absorb a lot of momentum from other parts of the market, as its current catalysts are on a different scale.” This underscores the growing influence of Bitcoin in the financial landscape.
Backtest For The Theory Still Pending
When asked about the possibility of backtesting this theory, Cochran acknowledged the limited availability of long-term data and emphasized that this observed correlation has primarily emerged in recent weeks to months, particularly since the discussion around ETFs became more serious. As a result, a comprehensive historical backtest may not be feasible.
This admission underscores the relatively new nature of the observed correlation. Nonetheless, Cochran’s insights provide an intriguing narrative that connects traditional financial markets with Bitcoin. As discussions around Bitcoin ETFs continue to gain traction, these observations could become increasingly pertinent, offering valuable insights for investors looking to understand and navigate the evolving relationship between cryptocurrency and traditional financial instruments.
At press time, Bitcoin traded at $35,278.