Global stocks declined to a one-week low as Brent crude extended its advance for a second day and traders raised their expectations for additional Federal Reserve rate increases ahead of Wednesday’s PCE inflation report.
Bitcoin fell less than 1% to just above $83,100 during Tuesday’s Asian trading session, testing the bottom of last week’s range. The move followed a rise in the 10-year Treasury yield to its highest level since 2007.
ZEC recorded the sharpest decline among major cryptocurrencies, dropping 12% to around $1,380, CoinDesk data showed. SOL and HYPE each lost between 3% and 4%, while DOGE fell 3%, BNB declined 2% and XRP slipped nearly 2%. Ether and TRX were largely unchanged.
Elsewhere in the market, The Graph’s GRT gained 18% and Immutable’s IMX rose nearly 10%, according to FxPro. UNI and BCH each dropped about 10%, while DASH declined 7%. The total cryptocurrency market capitalization remained near $2.86 trillion.
A closely watched crypto sentiment indicator stood at 74 out of 100 on Monday, just below the “extreme greed” range. FxPro contrasted the reading with conditions in equities, where fear has dominated sentiment for approximately 20 days.
Alex Kuptsikevich, chief market analyst at FxPro, said Bitcoin’s retreat toward $83,000 has brought the cryptocurrency back to the lower edge of its recent consolidation range. He said a test of $82,000 would be consistent with current market conditions, pointing out that the level previously marked peaks in May and early September.
According to Kuptsikevich, a sustained decline below $80,000 would indicate that Bitcoin may need more time before attempting another significant move higher. If the current consolidation instead gives way to renewed bullish momentum, he said Bitcoin could rise well above $90,000.
Rising Yields and Oil Pressure Risk Assets
Bond markets and crude oil are adding to the pressure on Bitcoin.
Treasury prices stabilized during Asian trading after a sharp decline in U.S. markets. The 10-year Treasury yield climbed one basis point to 5.25%, following a move to its highest level since 2007 on Monday. Higher yields can increase the relative attractiveness of government bonds compared with non-yielding assets such as Bitcoin.
Brent crude gained more than 1% to approach $107 per barrel, marking its second consecutive daily increase as hopes for an imminent diplomatic agreement with Iran faded.
Higher oil prices can increase inflationary pressure, encouraging traders to price in additional Federal Reserve rate hikes. The MSCI All Country World Index fell to its lowest level since Sept. 18, while Nasdaq 100 futures slipped 0.3% after Monday’s technology-led decline on Wall Street.
PCE Inflation Data Could Shape Rate Expectations
The next major inflation indicator arrives Wednesday, when the U.S. Commerce Department is scheduled to release the August personal consumption expenditures price index.
The PCE measure is closely monitored by the Federal Reserve when assessing inflation. A hotter-than-expected result could strengthen expectations for further rate increases and push Treasury yields higher.
The combination of elevated yields and renewed inflation concerns is weighing on Bitcoin after its recent climb above $87,000.
