Cryptocurrencies extended their losses after higher oil prices, stronger-than-expected U.S. economic activity and a disappointing Treasury auction pushed borrowing costs sharply higher. Dogecoin recorded the steepest decline among major tokens.
Bitcoin was near $83,900 during Thursday’s Asian morning session, down more than 2% over the previous 24 hours after climbing close to $87,300, CoinDesk data showed. The benchmark 10-year Treasury yield finished Wednesday at 5.11%, rising 15 basis points during the session, according to Treasury data.
Dogecoin fell 7% to slightly above $0.09, while Zcash, XRP and HYPE declined between 5% and 6%. Ether, Solana and BNB posted losses of between 2% and 3%. TRX was broadly unchanged.
Brent crude provided the first boost to inflation concerns, rising more than 4% to nearly $104 a barrel. The rally brought an end to a six-session slide in oil prices that had been helping ease inflation worries.
The pressure intensified after S&P Global released its flash U.S. business survey. The report showed output expanding at its fastest pace in more than five years, with the composite index reaching 58.4, its strongest reading since July 2021.
Bond markets faced another setback later Wednesday when the Treasury Department sold $70 billion in five-year notes. The auction cleared at a 5.033% yield, the highest since 2006, and roughly 3 basis points above the securities’ pre-auction trading level. The difference suggested investors wanted a higher return to take on the government debt.
Treasury Yields Challenge Risk Assets
Higher government bond yields can make assets that do not generate income, including bitcoin, less attractive to investors. They can also increase the cost of maintaining leveraged positions. Bitcoin’s sharpest decline on Wednesday occurred soon after the U.S. business survey was released.
Bitcoin remained below $85,000, a level associated with a significant concentration of call options, according to Ledn co-founder Mauricio Di Bartolomeo. The options are set to expire Friday as part of roughly $14 billion in Deribit contracts.
