Bitcoin
and other cryptocurrencies ticked higher Tuesday, but—like the stock market—digital assets remain under pressure from rising bond yields as investors continue to mull the outlook for interest rates and Federal Reserve monetary policy.
The price of Bitcoin has gained less than 1% over the past 24 hours to $26,250, with the largest crypto remaining near the lower end of a range in the $26,000 zone that has dominated for more than a month amid historically low volatility and trading activity. Bitcoin has fallen from around $27,200 on Sept. 19, before the Fed’s latest decision on interest rates and publication of its summary of economic projections or “dot plot” sent the dollar and government bond yields skyward.
“Cryptocurrency market sentiment remains weak, amid declines in global stock markets, a strong dollar and rising yields putting pressure on risk assets,” said Hani Abuagla, an analyst at broker XTB.
Like the
Dow Jones Industrial Average
and
S&P 500,
a strong dollar and elevated bond yields are bad news for Bitcoin. A more attractive greenback and higher returns on risk-free U.S. Treasuries give investors little incentive to pile into riskier bets like Bitcoin. Treasury yields have surged to decade-plus highs in recent days as investors digested the latest messaging from the Fed that borrowing costs are likely to stay higher than once thought.
Macroeconomic headwinds only add to the pressure on cryptos, which have stagnated since the summer with trading volumes and characteristic volatility—which has attracted investors in the past—slumping to record low levels.
Amid an absence of crypto major catalysts, there are few reasons to believe Bitcoin will be jolted out of its boring patch any time soon. A decision from the Securities and Exchange Commission on spot Bitcoin exchange-traded funds likely remains months away, with the change to Bitcoin’s supply through the so-called halving not scheduled to take place until next year.
“Despite the conclusion of the summer season and the anticipated resumption in typical trading activity, digital asset market volumes remain low both on centralized exchanges and on-chain,” said Matteo Greco, an analyst at digital asset investment group Fineqia. “Policies enacted by central banks, particularly the Federal Reserve, have redirected capital towards less risky investments such as government bonds.”
Beyond Bitcoin,
Ether
—the second-largest crypto—rose less than 1% to $1,590. Smaller tokens, or altcoins, also were higher, with
Cardano
climbing less than 1% but
Polygon
popping more than 2%. Memecoins were more muted, with
Dogecoin
and
Shiba Inu
both trading around flat.
Write to Jack Denton at [email protected]
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