Crypto Market Crashes as Bond Yields Rise

The crypto market is experiencing a downturn, with Bitcoin and most altcoins in decline. After reaching $87,000 earlier this week, Bitcoin has fallen to $83,830, while Ethereum's price dropped to $2,670. Top altcoins like Arbitrum, Pepe, Uniswap, and Official Trump were among the biggest losers, falling by over 11%. The main driver behind this decline is the rising bond yields in the US and other countries. The ten-year yield jumped to 5.1% on Wednesday, with the 2-year yield rising to 4.90%, and the 30-year yield surging to 5.4%. This uptrend is being driven by higher crude oil prices, which have pushed gasoline and diesel prices up.

Higher energy prices mean that inflation will likely continue to rise in the foreseeable future, leading to a potential increase in interest rates by the Federal Reserve. Historically, Bitcoin and other altcoins tend to underperform during periods of rising interest rates. In 2022, when the Fed hiked rates, Bitcoin dropped to around $16,000, while companies like FTX and Terra collapsed.

The rising bond yields also explain why other assets are experiencing declines. Precious metals like gold and silver have retreated, as have stock market futures tied to the Dow Jones and S&P 500. The crypto market is also seeing profit-taking after its recent surge. A closer look at the top laggards today shows that they were among the biggest winners earlier in the week.

Arbitrum dropped by 14% in the last 24 hours and by 15% from its highest level this week, while Uniswap's price fell by 13.78%. Other top laggards like Worldcoin, Pepe, and Dogecoin were also up by double digits from their August lows.