Global equities slipped to a one-week low as Brent crude extended its gains for a second straight day and traders increased expectations for additional Federal Reserve rate hikes ahead of Wednesday’s PCE inflation data.
Bitcoin declined less than 1% to trade slightly above $83,100 during Tuesday’s Asian session, testing the lower boundary of the previous week’s trading range. The decline followed a jump in the 10-year Treasury yield to its highest level since 2007.
ZEC was the biggest decliner among major cryptocurrencies, dropping 12% to roughly $1,380, according to CoinDesk data. SOL and HYPE each fell between 3% and 4%, while DOGE declined 3%, BNB lost 2% and XRP slipped nearly 2%. Ether and TRX showed little movement.
In the smaller-token market, The Graph’s GRT climbed 18% and Immutable’s IMX gained nearly 10%, according to FxPro. UNI and BCH each dropped around 10%, while DASH declined 7%. The total crypto market capitalization was approximately $2.86 trillion.
A widely followed cryptocurrency sentiment index reached 74 out of 100 on Monday, putting it just below the “extreme greed” threshold. FxPro highlighted the contrast with the stock market, where fear has dominated investor sentiment for about 20 days.
Alex Kuptsikevich, chief market analyst at FxPro, said Bitcoin’s retreat to $83,000 is testing the bottom of last week’s consolidation range. He said a retest of the $82,000 area would not be unusual under the current market conditions, noting that the level marked previous highs in May and early September.
Kuptsikevich said a sustained move below $80,000 would be an important indication that Bitcoin may remain subdued for an extended period. Conversely, renewed bullish momentum following the current consolidation could potentially push the cryptocurrency above $90,000.
Treasury Yields and Oil Add Pressure
The latest weakness in Bitcoin is occurring alongside pressure in the bond and oil markets.
U.S. Treasuries stabilized in Asian trading after a sharp selloff during Monday’s U.S. session. The 10-year Treasury yield rose one basis point to 5.25%, after reaching its highest level since 2007. Higher government bond yields can make non-yielding assets such as Bitcoin relatively less attractive to investors.
Brent crude rose more than 1% to nearly $107 per barrel, extending its advance for a second consecutive day as expectations for a near-term diplomatic breakthrough with Iran diminished.
Rising oil prices can contribute to higher inflation, prompting traders to price in greater odds of additional Fed rate hikes. The MSCI All Country World Index fell to its lowest point since Sept. 18, while Nasdaq 100 futures declined 0.3% following Monday’s technology-driven selloff in U.S. equities.
Wednesday’s PCE Report Comes Into Focus
Markets are now looking toward Wednesday’s release of the August personal consumption expenditures price index from the U.S. Commerce Department.
The PCE index is one of the Federal Reserve’s preferred inflation measures. A stronger-than-expected reading could increase expectations for further rate increases and place additional upward pressure on Treasury yields.
Those higher yields and renewed inflation concerns are contributing to Bitcoin’s retreat after the cryptocurrency recently traded above $87,000.
