Global stock markets fell to a one-week low, and Brent crude rose for a second straight day, as traders ramped up bets on another Federal Reserve rate hike ahead of Wednesday's PCE inflation data.
As of early Tuesday trading in Asia, Bitcoin was down less than 1% at just above $83,100, testing the lower edge of last week's volatile range. The move followed a rise in the 10-year U.S. Treasury yield to its highest level since 2007.
Data showed ZEC fell 12% to about $1,380, the biggest decliner among major tokens. SOL and HYPE each dropped 3% to 4%, DOGE fell 3%, BNB lost 2%, and XRP declined nearly 2%. Ethereum and TRX were largely flat.
Among smaller-cap tokens, The Graph's GRT rose 18% and Immutable's IMX gained nearly 10%, according to FxPro data, while UNI and BCH each fell about 10% and DASH dropped 7%. The total cryptocurrency market capitalization stood at about $2.86 trillion.
On Monday, a widely watched crypto sentiment index stood at 74 out of 100, just below the "extreme greed" range. Brokerage FxPro noted that this reading contrasts sharply with the fear that has gripped stock markets over the past 20 days.
FxPro chief market analyst Alex Kuptsikevich said: "Bitcoin has pulled back to $83,000 and is testing the lower boundary of last week's consolidation range. Like the broader market, a retest of the $82,000 area is entirely expected in the current environment; that level is precisely where highs formed in May and early September." He added: "Looking ahead, a sustained move back below $80,000 would be an important signal that the market is not yet ready to advance further. However, if this consolidation is quickly followed by fresh bullish momentum, it could drive the leading cryptocurrency to a decisive break above $90,000."
Pressure is coming from the bond and crude oil markets. U.S. Treasuries stabilized during Asian trading hours after sharp losses in U.S. trading. The 10-year Treasury yield rose 1 basis point to 5.25%, having briefly climbed to its highest level since 2007 on Monday. The higher the risk-free yield offered by government debt, the higher the bar for investors to hold assets that generate no income, including Bitcoin.
Brent crude rose more than 1% to near $107 a barrel, gaining for a second consecutive day, as hopes for a rapid diplomatic breakthrough with Iran faded. Rising oil prices intensify inflationary pressure, and traders have also been increasing bets on another Fed rate hike.
The MSCI All Country World Index fell to its lowest level since September 18; Nasdaq 100 futures slipped 0.3% after tech stocks led Wall Street lower on Monday.
The next inflation reading comes on Wednesday, when the U.S. Commerce Department releases the August personal consumption expenditures (PCE) price index, the inflation gauge the Federal Reserve watches most closely. If the data comes in above expectations, it would further reinforce rate-hike bets and push U.S. Treasury yields even higher — the very source of pressure behind Bitcoin's pullback from above $87,000.
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