Why is it important to understand bonds? A must-learn lesson for encryption investors.

Many people focus on the Candlestick charts of BTC and Ethereum, but they don't realize why the actions of Wall Street pros in the bond market can affect cryptocurrency prices. Let me help you quickly understand.

What exactly are bonds?

In simple terms: a “IOU” from the government or a company that owes you money. You buy a bond worth 1000 dollars, and the government/company promises to pay you a fixed interest every year (for example, 5% = 50 dollars) and return your principal at maturity. It's that simple.

Why Cryptocurrency Investors Should Pay Attention

1. The barometer of capital flows — When bond yields are high, institutional investors will pull capital from risk assets (stocks, crypto) to buy bonds. You will see BTC fall. The opposite is also true.

2. Interest Rate Signals — The central bank's adjustment of interest rates will first be reflected in the bond market. If you can read the bond curve, you can anticipate the policy direction ahead of time, a step faster than other retail investors.

3. Turning Point of Risk Appetite — When economic uncertainty prevails, institutions buy bonds for hedging; when the economy looks optimistic, they sell bonds to buy stocks and crypto. Identifying this turning point increases your chances of buying at the bottom or escaping at the top.

Remember this point

Interest rates ↑ = Bond yields ↑ = Increased downward pressure on crypto

Interest rates ↓ = Bond attractiveness ↓ = Crypto welcomes opportunities

This is the investment knowledge that must be mastered in 2024, otherwise you are just relying on gambling.