The crypto market turned lower on Tuesday, with every major token posting losses as traders weighed the growing possibility of a Federal Reserve rate increase next week. Markets are currently assigning about a 60% chance to a hike.
Bitcoin slipped more than 1% to trade just below $78,800, according to CoinDesk data. Despite the daily decline, BTC was still holding onto a modest weekly gain.
The latest weakness comes after Bitcoin spent nearly two weeks unable to secure a daily close above $80,000. The failure to reclaim that level has not, however, erased the broader August rally.
Zcash led the declines among large-cap cryptocurrencies, dropping almost 5% to around $1,125. The token remains the week’s strongest major performer, with a seven-day gain of roughly 33%. Hyperliquid’s HYPE fell more than 3% to about $84, while Solana declined over 2% to slightly above $103. Both tokens have now surrendered their gains for the week.
Ether lost about 1%, trading below $2,482, while XRP declined to approximately $1.39. Tron was virtually unchanged near $0.33. Dogecoin and BNB showed greater resilience, slipping only a fraction of a percent and retaining weekly advances of nearly 9% and more than 7%, respectively.
Rising Treasury yields are adding to the pressure on digital assets. The 10-year Treasury yield remained around 4.8% after August employment data showed payrolls increased by 162,000, compared with expectations of roughly 53,000. The stronger-than-expected figures have prompted traders to raise their expectations for a 25-basis-point Fed hike next week to around 60%, a scenario that had appeared highly improbable earlier in the year.
The U.S. Dollar Index also weakened slightly, falling below 99 for a second consecutive session as traders positioned for possible monetary tightening from the Bank of Japan. Gold moved in the opposite direction, rising above $4,430.
Joel Kruger, a market strategist at LMAX Group, said crypto markets have so far managed to withstand the macroeconomic pressure without showing significant technical deterioration.
Oil prices remained another source of inflation concerns. Brent crude held above $97 a barrel, reaching a six-week high after Iran said an agreement with Oman to manage shipping through the Strait of Hormuz was close to being completed. The announcement followed a weekend of U.S. and Iranian strikes involving ships and military targets. Elevated crude prices could keep inflation concerns elevated ahead of Friday’s consumer-price report.
Asian equities opened the week unevenly. South Korea’s Kospi jumped nearly 5% to its highest level since late July, while Japan’s Nikkei advanced more than 2% as investors favored AI-related memory-chip stocks. Hong Kong’s Hang Seng, meanwhile, fell almost 1%.
Yusuf Fakhro, a partner at ARP Digital, said sentiment in the options market has improved considerably, arguing that the persistent fear that dominated the previous bear market has largely disappeared. He also pointed to long-term holders turning into net buyers in late August for the first time during the current market move.
Markets now await Thursday’s producer-price index and Friday’s consumer-price index, the final major inflation reports before the Fed’s policy meeting. A stronger-than-expected core CPI reading could push the probability of a rate hike toward 66% and place Bitcoin’s $77,000 support level under renewed pressure.
