Bitcoin dropped below the $84,000 mark on Tuesday, sliding to around $83,200 as surging bond yields and rising expectations of another Federal Reserve rate hike rattled risk assets across the board.
Bond Market Pressure Weighs on Crypto
The decline came as the yield on the 10-year US Treasury note climbed to its highest level in roughly 19 years, intensifying pressure on speculative markets. Rising yields tend to draw capital away from higher-risk assets like cryptocurrencies, as investors find more attractive returns in relatively safe government debt.
Adding to the turbulence, the US Treasury moved to conduct a $6 billion buyback of long-dated bonds, a step aimed at supporting liquidity in the government debt market amid the yield spike. The maneuver underscored the strain building across fixed-income markets.
When Treasury yields soar to multi-decade highs, risk assets like Bitcoin often feel the squeeze first.
Rate Hike Odds Climb
Traders sharply raised their bets on further monetary tightening, with the probability of a Federal Reserve rate hike jumping to roughly 75%. Tighter policy generally strengthens the dollar and dampens appetite for volatile assets, creating a challenging environment for Bitcoin and the broader crypto sector.
The combination of higher borrowing costs and a stronger dollar has historically been a headwind for digital assets, which thrive when liquidity is abundant and investors are willing to embrace risk.
Key factors driving the sell-off include:
- The 10-year Treasury yield reaching a 19-year peak
- Fed rate hike odds climbing to about 75%
- A $6 billion Treasury buyback of long-dated bonds
As macroeconomic conditions remain fluid, Bitcoin's near-term direction is likely to stay closely tied to developments in the bond market and signals from the Federal Reserve. Traders will be watching upcoming economic data and central bank commentary for clues on whether the pressure eases or deepens in the sessions ahead.