The pressure on the market stems more from global risks than from developments specific to the crypto sector. Brent crude oil prices approached $108 per barrel after Iran refused to soften its demands regarding the Strait of Hormuz and negotiations failed to make progress. Rising energy prices have reinforced expectations that inflation could accelerate again and that the US Federal Reserve may raise interest rates.
As the US five-year Treasury yield rose to 5.06%, Nasdaq 100 futures, heavily weighted towards technology stocks, also declined. In this environment, investors began reducing their leveraged crypto positions. It was reported that over $500 million in positions were liquidated in the market.
Profit-taking following the previous four-day rally also contributed to Bitcoin’s decline. The US PCE inflation data, job openings, and non-farm payrolls report will be closely watched for market direction. Better-than-expected data could increase pressure on interest rates, while weaker results could lessen macroeconomic pressure on Bitcoin.
*This is not investment advice.