Bitcoin has managed to maintain a value just above $83,000 amidst rising inflation fears driven by increasing Treasury yields and oil prices, which have led to speculation of further interest rate hikes by the Federal Reserve.
Global Stock Markets Decline Amid Rising Oil Prices and Increased Fed Rate Hike Bets
As of Tuesday morning in Asia, Bitcoin was trading slightly below 1% at approximately $83,100, testing the lower range of its previous week’s trading levels. This comes after the 10-year Treasury yield reached its highest point since 2007.
Meanwhile, Zcash (ZEC) saw a significant drop of 12%, leading losses among major cryptocurrencies, while The Graph (GRT) experienced an 18% rise. The total market capitalization of cryptocurrencies remains steady at around $2.86 trillion.
In the broader cryptocurrency market, ZEC's decline brought it down to about $1,380, the sharpest decrease among major cryptocurrencies. Other notable losses included SOL and HYPE, which fell between 3% and 4%, DOGE by 3%, and BNB by 2%. XRP also declined by nearly 2%, while Ether and TRX remained stable.
Among smaller cryptocurrencies, GRT surged 18%, and Immutable (IMX) rose nearly 10%. Conversely, UNI and BCH each dropped about 10%, and DASH fell by 7%.
A widely monitored crypto sentiment index was recorded at 74 out of 100 on Monday, just below the "extreme greed" threshold, contrasting with the fear that has been prevalent in the stock market for the last 20 days.
Alex Kuptsikevich, chief market analyst at FxPro, commented via email to CoinDesk, "Bitcoin has retreated to $83K, testing the lower boundary of last week’s consolidation range. A retest of the $82K level, where peaks were observed in May and early September, is expected under the current market conditions."
He further noted, "A sustained drop below $80K would indicate that the market is not ready to rally in the near term. However, if this period of consolidation is soon followed by renewed bullish momentum, Bitcoin could surpass $90K."
Market pressures are being influenced by both bond yields and oil prices. Following a significant decline during U.S. trading hours, Treasuries stabilized in Asia, with the 10-year yield inching up one basis point to 5.25% after reaching a peak not seen since 2007. Higher yields on government bonds increase the opportunity cost of holding non-interest-bearing assets like Bitcoin.
Brent crude oil prices have risen more than 1% to nearly $107 per barrel, marking a second consecutive day of gains as hopes for a diplomatic resolution with Iran have diminished. Rising oil prices contribute to inflationary pressures, prompting traders to increase their bets on potential Federal Reserve rate hikes. The MSCI All Country World Index has fallen to its lowest level since September 18, and Nasdaq 100 futures have dipped 0.3% following a technology-driven selloff on Wall Street.
The next significant inflation reading is scheduled for Wednesday when the Commerce Department will release the personal consumption expenditures price index for August, a key indicator closely monitored by the Federal Reserve. A reading that exceeds expectations could heighten rate hike anticipations and further elevate Treasury yields, contributing to Bitcoin's decline from above $87,000.