Bitcoin price decline continues as interest rates and the US dollar surge, causing equities to decline. The Federal Reserve’s “higher for longer” stance is putting pressure on crypto firms, according to Oanda’s Edward Moya. The equity sell-off could also drag the BTC price lower, says digital asset trading firm QCP Capital. Over the past 24 hours, the BTC price has declined to around $26,600, down 1.5%, while Ether broke below $1,600 and extended its losing streak against BTC, falling to a fresh 14-month low. Crypto majors like Solana’s SOL, Polygon’s MATIC, Lido’s LDO, and Optimism’s OP also suffered steeper losses of 3%-5%.
Federal Reserve’s projections impact markets
The Fed projected one more rate hike for this year and fewer cuts for next year, which stirred up traditional markets. The 10-year Treasury yield surged to a 16-year high, while the DXY index jumped briefly near 106, the highest since the peak of the US regional banking distress in March. US equity markets sold off as a result, with the S&P 500 losing 1.6% and the tech-heavy Nasdaq Composite Index plunging 1.8%.
Equity market strain could drag on crypto prices
QCP Capital believes that the strain on the equity market due to the strict Fed policy could drag on crypto prices. “This macro move could seep into crypto markets and take BTC lower with it, albeit with a lower beta as compared to other very stretched macro markets like the Nasdaq.” Higher rates will also put pressure on embattled digital asset firms, jacking up their refinancing costs, according to Moya. “Crypto not only needs rates to peak, but for rate cut bets to grow,” he added. “The Fed still believes the soft landing will happen, but a few more stickier inflation reports and that will make those 2024 rate cut bets disappear.”
Impact on major cryptocurrencies
The Bitcoin price decline has affected other major cryptocurrencies as well. Ether, the second-largest cryptocurrency by market capitalization, broke below $1,600 and extended its losing streak against BTC, falling to a fresh 14-month low. Other major cryptocurrencies, such as Solana’s SOL, Polygon’s MATIC, Lido’s LDO, and Optimism’s OP, have also suffered steeper losses of 3%-5%.
Factors contributing to the decline
Several factors are contributing to the ongoing Bitcoin price decline. The Federal Reserve’s “higher for longer” stance has put pressure on crypto firms, while the equity sell-off could also drag the BTC price lower. Additionally, the 10-year Treasury yield has surged to a 16-year high, and the DXY index has jumped briefly near 106, the highest since the peak of the US regional banking distress in March.
What’s next for the crypto market?
As the Bitcoin price decline continues, it remains to be seen how the crypto market will respond to the ongoing pressure from the Federal Reserve’s policy and the equity market sell-off. Crypto firms will need to adapt to higher interest rates and refinancing costs, while investors will be closely watching for any changes in the Fed’s stance on rate cuts and inflation reports.
In conclusion, the Bitcoin price decline is a result of several factors, including the Federal Reserve’s policy, the equity market sell-off, and the surge in interest rates and the US dollar. As these factors continue to impact the crypto market, it is crucial for investors and digital asset firms to stay informed and adapt to the changing landscape.
