The price of Bitcoin (BTC) is extending its slump below $49,000 on March 5 as the U.S. dollar index (DXY) reached the highest levels since November 2020.  

DXY (blue) vs. BTC/USD (orange). Source: Tradingview

Meanwhile, the prospect of rising rates and a potential stock market top is putting downward pressure on equities and Bitcoin, causing the entire cryptocurrency market to pull back.

Rising treasury yields — the biggest threat to Bitcoin?

Bitcoin and risk-on assets, in general, have been heavily affected by rising 10-year treasury yield rates in the U.S. As a result, the global macro landscape has worsened.

Kyle Davies, the CEO at Three Arrows Capital, said:

"I don't care about your rate view but if rates stay unch, we're all gonna be retired if rates go higher, we're all gonna be back in school."

The U.S. stock market, particularly the S&P500 index, has already erased all of its gains from 2021, according to Bloomberg.

If the risk-on market continues to correct or consolidate, it would likely have a negative effect on the price of Bitcoin in the near term.

Scott Melker, a cryptocurrency trader, said Bitcoin likely falls into a range. There is significant selling pressure and lots of buyer demand, placing it in a tight range. He said:

"Likely we fall into a range here. Lots of selling at the top (up wicks), lots of buying at the bottom (down wicks). Nice to see a clear shift from supply to demand here."
Bitcoin price trend. Source: Scott Melker, TradingView.com

In the foreseeable future, if the bond yield curve does not ease, the threat against the short-term trend of the Bitcoin price would likely remain.

Is BTC price bearish?

High Stakes Capital, one of the top traders on FTX, said that he remains full spot long, however. Although Bitcoin's outlook remains seemingly bearish, he said that the accumulation on Coinbase Pro is ongoing.

In the past week, outflows from Coinbase Pro have continued to increase. This trend indicates that the institutional accumulation of Bitcoin is continuing in the U.S. The trader said:

"I've seen on a forum that people think Im bearish w my previous tweets while I was just thinking about plausible ahead scenarios There is a macro risk and if stocks correct, BTC could follow, that said coinbase pro still accumulate at this level Im full spot and lev long."

Despite the stagnant market structure, various fundamental metrics and on-chain indicators suggest that BTC/USD is on a bullish trajectory as Bitcoin is up roughly 100% year-to-date unlike stocks, which have erased their 2021 gains.

BTC/USD (blue) vs. S&P500 (orange) YTD performance. Source: Tradingview

If institutions accumulate Bitcoin, especially in the U.S., it decreases the probability of BTC plunging below key support levels, such as $30,000 and $40,000.

Unlike previous bull cycles, massive 30% to 40% drops may occur less during this ongoing bull cycle. In the near term, the $52,000 resistance level remains key to more upside. If BTC breaks past it, it would signal a resumption in the bullish market structure, making another broad rally likely.