Bitcoin falls 6.86% from Wednesday's intraday high to Friday low ... altcoins also weaken

FOMC minutes trigger selloff as most officials back one more rate hike this year

Rising long-term Treasury yields add pressure amid US fiscal sustainability concerns

A Bitcoin image. [Reuters]
A Bitcoin image. [Reuters]

Bitcoin has fallen roughly 7% from its intraday high over two days, sliding to the low $81,000 range, as fears of another US interest rate hike shake expectations for the so-called "Uptober" — the crypto market's seasonal rally in October.

According to CoinMarketCap, Bitcoin was trading at $81,716 as of 10:06 a.m. Friday, down 2.07% from 24 hours earlier. Ether fell 4.20% to $2,474, XRP dropped 2.64% to $1.38, and Solana declined 6.35% to $109.17.

"Uptober" — a portmanteau of "up" and "October" — refers to the tendency for digital asset markets to rally in October. With prices swinging on shifting US monetary policy expectations, the question of whether that uptrend can hold has drawn close attention.

Bitcoin had held in the $85,000–$86,000 range early this week before turning lower on Wednesday. It slid from an intraday high of $86,605 on Wednesday to an intraday low of $80,667 on Friday — a drop of 6.86% from peak to trough over two days.

The September FOMC minutes have been cited as a key driver of the decline. In a Thursday report, Kim Ji-won, a researcher at KB Securities, said the digital asset market had been riding higher on falling expectations for an October rate hike, but reversed course after the minutes revealed that a majority of officials supported one additional rate increase before year-end.

According to the September FOMC minutes released by the Federal Reserve on Wednesday (local time), most participants judged it appropriate to raise the benchmark interest rate one more time this year. Concerns were also raised that rising energy prices and AI-related demand could intensify inflationary pressures. However, the minutes contained no signal that a hike was imminent at the next meeting, scheduled for Oct. 27–28.

At the Sept. 15–16 FOMC meeting, the Fed raised the benchmark interest rate by 25 basis points to a range of 3.75–4.00 percent in a unanimous 12-0 vote — its first rate increase in three years and two months since July 2023.

A sharp rise in long-term Treasury yields has also added to market unease. James Butterfill, head of research at CoinShares, said in a Thursday (local time) report that inflows into digital asset funds had "lost momentum this week," showing a clear slowdown after $11.1 billion flowed in since mid-July.

He said concerns about the sustainability of US fiscal policy appear to be playing an increasingly important role in investment decisions. Despite the US government's expansion of its long-term Treasury buyback program, yields have continued to climb, with the 10-year Treasury yield surpassing 5.3 percent and the 30-year yield rising to 5.7 percent — the highest level in more than two decades, he added.

Rising Treasury yields generally tighten financial conditions and weigh on Bitcoin, Butterfill added, noting that the bond market may matter more for the cryptocurrency's outlook than the Fed's next move.


kyoung@heraldcorp.com