The recent relief rally that lifted crypto from last week’s lows is now fading, moving in tandem with declines in tech stocks and gold as traders position ahead of a U.S. inflation report and expectations of a hawkish Federal Reserve under Kevin Warsh.
Bitcoin’s rebound from last week’s low is losing momentum, with both BTC and gold slipping at the same time.
BTC last traded at $61,233 on Wednesday, down 3% over the past 24 hours and 6.9% for the week. Gold also dropped 2%, falling below $4,200 per ounce. Markets are increasingly pricing in higher interest rates, putting pressure on non-yielding assets like Bitcoin and other cryptocurrencies.
Ethereum declined 3.4% to $1,625, while Solana fell 4.1% to $64.24. XRP lost 4.3% to $1.12, and both BNB and Dogecoin slipped by less than 3%. Hyperliquid’s HYPE token was the weakest among major assets, dropping 10.2% on the day and 21.3% on the week to $55.52, reflecting its higher volatility profile.
Equity markets also weakened sharply. South Korea’s KOSPI index, heavily exposed to the AI and semiconductor trade, fell 6.3%, dragging down MSCI’s Asia-Pacific index by 2.5% for its fourth decline in five sessions. U.S. futures pointed lower as well, with the Nasdaq 100 down 0.8% after a volatile trading session. Brent crude traded near $92 a barrel amid renewed U.S. strikes on Iran, while the 10-year Treasury yield rose to 4.54%.
Gold and Bitcoin are rarely seen moving in lockstep, but both are under pressure as rising rate expectations reduce the appeal of non-yielding assets. Wednesday’s U.S. inflation data could reinforce that trend.
A stronger-than-expected CPI reading would support the case for Federal Reserve Chair nominee Kevin Warsh to maintain higher rates for longer, tightening liquidity conditions that previously fueled risk-asset rallies.
The recent bounce was largely driven by a short squeeze rather than fresh demand, with over $500 million in bearish positions liquidated—the largest such event since April.
However, some analysts argue that underlying spot demand has not yet returned.
“Buyers have stepped in after the move lower, but spot demand has yet to return in a meaningful way,” said Diana Pires, chief business officer at sFOX, noting continued outflows from U.S. spot Bitcoin ETFs that are keeping institutional participation subdued. Without sustained demand, she added, rallies struggle to hold.
Market focus now turns to whether Bitcoin can maintain support through the inflation data or continue tracking equity markets more closely. If gold stabilizes while Bitcoin continues to decline, its narrative as a macro hedge may weaken further.
