On Wednesday, the crypto market took a noticeable hit. Investors began to exercise caution due to a sharp spike in oil prices and rising Treasury yields. Everyone expects inflation to accelerate and, as a result, interest rates to rise; and when such prospects loom on the horizon, no one wants to risk their money by investing in volatile assets.
As of 9:16 a.m. Moscow time, the leading cryptocurrency had lost about 1.2%, dropping to $84,288.6. After a strong third quarter, Bitcoin has been stuck in a sideways trend since October, and now it seems it simply cannot find a direction.
The rest of the crypto market has also had a tough time. Even hopes that U.S. regulators would take a softer stance have failed to restore investors’ appetite for risk. Moreover, digital assets are now clearly lagging behind the stock market, where all eyes are on the boom in artificial intelligence-related stocks.
Why are oil and bonds putting so much pressure on Bitcoin?
Oil prices surged this week, hitting all risk assets. Prices began to rise due to geopolitical tensions in the Middle East and severe weather in the Gulf of Mexico, which could disrupt production in the U.S.
And high oil prices are a direct path to inflation. If inflation gains momentum, central banks will have to raise interest rates, which is always bad news for cryptocurrencies. To make matters worse, the yield on 10-year U.S. Treasury bonds has soared to a 24-year high. Although yields have corrected slightly this week, they remain at very high levels, continuing to put pressure on crypto assets.
Speaking of good news: the OKX exchange has completed a strategic funding round. It included such giants as Standard Chartered, Ripple, Qube Research, and Circle. The exact amount of the deal was not disclosed, but the company is now valued at a substantial $25 billion. This move has helped OKX strengthen its ties with key players in the financial world, especially following its recent agreements with Intercontinental Exchange.
What’s happening with other cryptocurrencies?
The entire market is currently trending downward, following Bitcoin’s lead. It seems the growth drivers from the third quarter have run their course. And that’s a shame, since October is traditionally called “Octobrom”—a period when cryptocurrencies usually perform exceptionally well. But this year, the industry is stalling and failing to meet expectations.
Ether, our second-largest asset, fell 2.8% to $2,621.66, while XRP lost 1.4%. Cardano and Solana aren’t doing much better: the former fell 4.4%, while the latter dipped only slightly by 0.7%. BNB also dropped 1.3%. Even meme coins weren’t spared: $TRUMP and Dogecoin lost 5.7% and 3.7%, respectively.