Bitcoin, ether slide as rising Treasury yields fuel lower risk asset prices

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Bitcoin (BTC-USD) and ethereum (ETH-USD) have extended their declines from Friday’s drop in Monday morning trading, albeit recovering a bit from an even deeper slump seen earlier in the session.

Over the past 24 hours, bitcoin (BTC-USD) dipped 0.4% to $21.33K, up from an intraday low of $20.96K, while ethereum (ETH-USD) slid 2.4% to $1.58K at 11:45 a.m. ET, up from a session low of $1.53K.

“Some believe that the significant sell off on Friday was caused by Celsius Network, who are bankrupt, receiving approval to sell mined Bitcoin to cover their operations,” GlobalBlock analyst Marcus Sotiriou wrote in a note. “It has been speculated that Celsius sold 7000 Bitcoin on FTX spot, which led to a cascade of liquidations.”

The stock market also took a beating with the Dow Jones (DJI) -1.3%, S&P 500 (SP500) -1.6% and tech-led Nasdaq (COMP.IND) -2% all in the red.

The bearish price action also came as U.S. Treasury yields rose slightly across the curve, with the 10-year (US10Y) up three basis points to 3.01% and the two-year (US2Y) up four bps to 3.31%. Keep in mind that a so-called yield curve inversion, which historically precedes a recession, occurs when short-duration benchmarks yield more than longer-dated ones. The eurodollar futures curve is also inverting and has been since March, in a sign that issues in the monetary system are taking hold globally.

Perhaps traders are expecting a hawkish message coming from the Federal Reserve’s Jackson Hole Symposium starting Thursday. Markets are now pricing in a 56.5% probability of a 75-basis point rate increase at the central bank’s September 21 meeting, while there’s a 43.5% chance of a 50-bp hike, according to the CME’s FedWatch tool. At the end of last week, markets were hedging for a less intense move, with a 47.0% chance of a 75-bp increase vs. 53.0% chance of a 50-bp increase.

Last week, meanwhile, digital asset investment products saw minor outflows totaling $9M with volumes at $1B, according to data from CoinShares. Volumes remain very low as they’re 55% down from the 2022 average and the second lowest this year, hence weaker crypto prices.

For crypto-related stocks, Hut 8 Mining (HUT) -7.5%, MicroStrategy (MSTR) -4.6%, BIT Mining (BTCM) -5.6%, Bitfarms (BITF) -7% and Greenidge Generation (GREE) -4.6% made the biggest downside moves intraday.

Earlier, crypto liquidity starts recovery as stablecoin market cap stops falling.