header banner
Default

Bitcoin Drops to $26 PPK Amid Rising US S Record-high dollar rates are a "nightmare" for cryptocurrency companies


LXF2COBSKBCNHNRE3WTK2BZ7GE

  • BTC slid to $26,500 as interest rates, U.S. dollar surged and equities declined.

  • Fed’s “higher for longer” stance puts pressure on crypto firms, Oanda’s Edward Moya said.

  • Equity sell-off could drag BTC price lower, per QCP Capital.

Cryptocurrency markets slid lower on Thursday as investors digested the repercussions of Federal Reserve Chair Jerome Powell’s hawkish remarks about keeping financial conditions tight and interest rates high for longer.

The bitcoin (BTC) price declined to around $26,600, down 1.5% over the past 24 hours, barely budged by positive news about delaying payouts related to the Mt. Gox implosion, a long-time source of selling pressure scare in digital asset markets.

Ether (ETH) broke below $1,600 and extended its losing streak against BTC, falling to a fresh 14-month low against the leading crypto asset. ETH was down 1.8% during the day, similarly to the broad market-proxy CoinDesk Market Index (CMI).

Crypto majors suffered even steeper losses. Solana’s SOL, Polygon’s MATIC, Lido’s LDO and Optimism’s OP declined 3%-5% during the day.

Among crypto sectors, the CoinDesk Culture & Entertainment Index (CNE) defied the slump and gained 1% due to the strong performance by non-fungible token (NFT) platform ImmutableX’s native coin (IMX).

Equity sell-off could drag BTC price lower

VIDEO: Bitcoin Slides to $26.5K Amid Surging U.S. Dollar; Record-High Rates Are ‘Nightmare’ for Crypto
Crypto World Daily

The Fed projected one more rate hike for this year and less cuts for next year, which stirred up traditional markets.

The 10-year Treasury yield surged to a 16-year high, while the DXY index, which gauges the U.S. dollar’s strength against a basket of major currencies, jumped briefly near 106, the highest since the peak of the U.S. regional banking distress in March.

U.S. equity markets sold off as a result, with the broad-market index S&P 500 losing 1.6% and the tech-heavy Nasdaq Composite Index plunging 1.8%.

Strain on the equity market due to the strict Fed policy could drag on crypto prices, according to digital asset trading firm QCP Capital.

“U.S. equity and rates markets have broken some very key levels on the back of this, and reflexivity can take over with the bearish thesis from here,” the QCP wrote in a Telegram market update. “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.”

US 10-year Treasury rate (QCP Capital)
US 10-year Treasury rate (QCP Capital)

High rates pressure crypto firms

VIDEO: The Bitcoin Group #375 - Fed Rates - Good for the Environment - NSA Theory - NFTs Worthless
World Crypto Network

SingleQuoteLightGreenSingleQuoteLightGreen

“Borrowing costs will remain elevated and refinancing will be a nightmare for crypto firms.”

SingleQuoteLightGreenSingleQuoteLightGreen

Edward Moya, senior market analyst of the Americas, Oanda

Higher rates will also put pressure on embattled digital asset firms, jacking up their refinancing costs, per Edward Moya, senior market analyst at online brokerage platform Oanda.

“Borrowing costs will remain elevated and refinancing will be a nightmare for crypto firms,” he said in an interview with CoinDesk TV.

“Crypto not only needs rates to peak, but for rate cut bets to grow,” Moya 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.”

Edited by Bradley Keoun.

Sources


Article information

Author: Jamie Garrett

Last Updated: 1702296121

Views: 753

Rating: 4.4 / 5 (98 voted)

Reviews: 90% of readers found this page helpful

Author information

Name: Jamie Garrett

Birthday: 1984-12-23

Address: 36158 Emily Union Apt. 925, Sullivanstad, WY 46282

Phone: +3765700094163518

Job: Article Writer

Hobby: Survival Skills, Playing Chess, Bowling, Skydiving, Motorcycling, Web Development, Scuba Diving

Introduction: My name is Jamie Garrett, I am a important, unyielding, strong-willed, vibrant, vivid, sincere, irreplaceable person who loves writing and wants to share my knowledge and understanding with you.