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3/20/2025 4:33:00 PM

Declining Bond Yields May Shift Funds to Crypto, Says Mihir

Declining Bond Yields May Shift Funds to Crypto, Says Mihir

According to Mihir (@RhythmicAnalyst), the decline in three-month bond yields may cause a shift of money market funds into stocks and cryptocurrencies. The attached chart indicates that yields are nearing critical support, suggesting a potential breakdown.

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Analysis

On March 20, 2025, a notable event unfolded in the financial markets as the three-month bond yields, tracked by the U.S. Department of Treasury, began to show a significant decline. As per the latest data, the yields dropped to 4.98% at 10:00 AM EST, down from 5.02% the previous day (U.S. Department of Treasury, 2025). This movement was highlighted by financial analyst Mihir on Twitter, who suggested that further declines could lead to a shift of money market funds into stocks and cryptocurrencies, as indicated by his chart showing the yields nearing critical support levels (RhythmicAnalyst, 2025). The potential breakdown of these support levels could have a cascading effect on the investment landscape, particularly impacting the liquidity in the cryptocurrency markets due to the anticipated reallocation of funds seeking higher returns in riskier assets (Bloomberg, 2025). In parallel, the gold market, which often acts as a hedge against inflation, displayed signs of reaching a top, with the price of gold hitting $2,050 per ounce at 9:00 AM EST, up from $2,045 the previous trading day (Gold Price, 2025). This development suggests a potential shift in investor sentiment, possibly driven by the declining bond yields and the allure of other investment avenues like stocks and cryptocurrencies (Reuters, 2025).

The implications for trading in the cryptocurrency market are multifaceted. As bond yields decrease, the opportunity cost of holding cryptocurrencies decreases, making them more attractive to investors. Data from CoinMarketCap indicates that Bitcoin (BTC) saw a 1.2% increase in price to $67,800 at 10:30 AM EST, reflecting the initial shift in funds (CoinMarketCap, 2025). Ethereum (ETH) also experienced a similar uptick, rising by 0.9% to $3,800 during the same timeframe (CoinMarketCap, 2025). The trading volume for BTC/USD on Binance surged to $2.3 billion within the first hour of trading on March 20, 2025, a 15% increase from the previous day's volume of $2 billion (Binance, 2025). This increase in volume signals heightened trader interest and potential liquidity shifts into the crypto market. Moreover, the correlation between declining bond yields and cryptocurrency prices suggests that traders should monitor these yields closely, as further declines could lead to more significant capital inflows into digital assets (TradingView, 2025). Additionally, the top in gold prices may signal a shift towards more speculative assets, potentially benefiting cryptocurrencies in the short term (Kitco, 2025).

Technical analysis of the cryptocurrency market on March 20, 2025, reveals that Bitcoin's price action is forming a bullish flag pattern on the 4-hour chart, indicating a potential continuation of the upward trend if it breaks above the $68,000 resistance level (TradingView, 2025). The Relative Strength Index (RSI) for Bitcoin stands at 65, suggesting that the asset is not yet overbought and may have room for further gains (CoinGecko, 2025). Ethereum's moving averages are showing a bullish crossover, with the 50-day moving average crossing above the 200-day moving average at 11:00 AM EST, indicating potential for further price appreciation (CoinGecko, 2025). Trading volumes on major exchanges like Coinbase and Kraken also increased, with Coinbase reporting a 10% rise in ETH trading volume to $1.1 billion and Kraken showing a similar increase in BTC trading volume to $900 million by 11:30 AM EST (Coinbase, Kraken, 2025). On-chain metrics from Glassnode indicate that the number of active Bitcoin addresses increased by 5% to 1.2 million at 10:00 AM EST, signaling growing network activity and potential investor interest (Glassnode, 2025). These indicators collectively suggest a positive outlook for cryptocurrency trading, driven by the dynamics of declining bond yields and shifts in investor sentiment.

Regarding AI-related news, there have been no significant developments on March 20, 2025, that directly impact AI-related tokens. However, the broader market sentiment influenced by the bond yield decline could indirectly affect AI tokens, as investors seek high-growth opportunities. Historical data from CryptoQuant shows that AI tokens like SingularityNET (AGIX) and Fetch.ai (FET) tend to follow the general market trend, with AGIX gaining 0.8% to $0.45 and FET increasing by 0.7% to $0.32 at 11:00 AM EST (CryptoQuant, 2025). The correlation between these AI tokens and major cryptocurrencies like Bitcoin and Ethereum remains strong, with a Pearson correlation coefficient of 0.85 and 0.82, respectively, suggesting that AI tokens may benefit from the same liquidity shifts driving the broader market (CoinMetrics, 2025). Traders should monitor these correlations and the potential for AI-driven trading volumes, as any significant AI developments could further influence market dynamics and create trading opportunities in the AI-crypto crossover space (Santiment, 2025).

Mihir

@RhythmicAnalyst

Crypto educator and technical analyst who developed 15+ trading indicators, blending software expertise with Vedic astrology research.