Bitcoin Rally Tested by Higher Bond Yields and Oil Prices
Bitcoin's August rally is being tested by higher bond yields and elevated oil prices, which are contributing to increased expectations of another US interest rate rise. The cryptocurrency has retreated from above $81,000 reached in late August and was trading around $77,000 on Thursday morning, with buying momentum showing signs of cooling.
The world's largest cryptocurrency remains more than 20% higher over the past month but has lost ground over the past week as investors reassess the outlook for interest rates and broader financial conditions. Rate expectations are weighing heavily on crypto, with a potential headwind coming from higher interest rates increasing the attractiveness of yield-bearing assets while tightening financial conditions.
Bond market expectations have climbed following hawkish signals from Fed chair Kevin Warsh, assigning roughly a two-thirds probability to a 25-basis-point increase this month. Oil prices remain elevated amid US-Iran tensions, adding another inflationary risk for central banks. Bitcoin has shown some resilience compared with the initial sell-off, briefly recovering toward $77,700 on Wednesday as some investors sought alternative assets amid geopolitical and financial-market uncertainty.