Market decline

Why the global bond market drop can be a good sign for crypto?

Global bond markets have been on a steady decline since the US Federal Reserve raised rates amid rising inflation. The value of global bonds fell by $745 billion this week, leading to an all-time total loss of $4.8 trillion, informs Holger Zschaepitz.

Global bond markets down 11% since January 2021

According to Bloomberg Global Aggregate Index, global bond markets which peaked last year deflated 11% from their peak in January 2021. The loss suffered was described as the largest decline since 1990. This decline also exceeded the 10.8% drop during the 2008 financial crisis. The current drop of around $2.6 trillion was compared to the $2 trillion drop in 2008.

Bloomberg reported that there were signs of easing from the sharp mid-week selloff, but rising inflation is pressuring the world on concerns such as rising funding costs. Investors are losing interest in holding safe government bonds.

Bonds suffered greatly from the tightening of central bank policy to counter the rise in the inflation rate. Meanwhile, last week the Fed raised interest rates by 25 points. Jerome Powell warned the market saying they were ready to raise them by half a percentage point if necessary.

Additionally, the yield on 10-year Treasury bills also slipped two points to 2.36% on Wednesday. It has managed to peak since 2019, reports Bloomberg

Can the crypto market take advantage of this?

Big market losses are always bad news for any market, but maybe it’s good news for the cryptocurrency market. The global crypto market capitalization currently stands at around $2 trillion compared to the global bond valuation.

The global crypto market managed to secure a market valuation of $3 trillion last year, since then it has seen a decline. There are many reasons for the decline in the markets, but right now the digital asset market is on the rise. It has received recognition from several countries while many major brands and banking institutions have declared their intention to embark on it. However, it would be interesting to see if the money taken out of the bonds can enter the crypto market.

Ashish believes in decentralization and has a keen interest in the evolution of Blockchain technology, the cryptocurrency ecosystem, and NFTs. He aims to raise awareness of the growing crypto industry through his writing and analysis. When he’s not writing, he’s playing video games, watching thrillers, or playing sports outdoors. Contact me at [email protected]

The content presented may include the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or publication assumes no responsibility for your personal financial loss.