Bitcoin drops $5,000 in 24 hours as interest rates soar

Bitcoin fell for a second day to start the new month and quarter amid rising Treasury yields and a stronger U.S. dollar.

The leading cryptocurrency fell more than 4.76% on Tuesday to $66,134.00, bringing its two-day loss to 7%, according to Coin Metrics. At one point it dropped to $64,572.00.

It was trading around $70,000 on Monday morning before data showing growth in the manufacturing sector for the first time since September 2022 and investor bets on a June rate cut began to cool. Bitcoin is now about 11% above its all-time high reached on March 14.

Ether fell with it, losing 5.6% to $3,240.27.

Meanwhile, 10-year US Treasury yields reached its highest level for the year and dollarwhich has an inverse relationship with bitcoin, hit a five-month high.

“Bitcoin doesn’t need much of an excuse to go through a correction period after such an explosive performance in Q1,” said Joel Kruger, market strategist at LMAX Group. “That being said, US economic data has been stronger of late, while inflation remains a concern.” This led to a reassessment of the Fed’s expectations, translating into broad-based demand for the US dollar on the more attractive US dollar yield differentials. “

Bitcoin’s movement may have been exacerbated by a large bitcoin holder, or “whale,” who transferred more than 4,000 bitcoins to the Bitfinex exchange late Monday evening. Data from CryptoQuant shows a spike in reserves on that exchange – which usually signals a boost in selling activity – which coincided with a sudden drop in the price of bitcoin late Monday night.

Stocks linked to Bitcoin’s performance were dragged down, but traded off their bottoms to end the day. Crypto exchange Coinbase fell 2%, while the software provider Micro strategy, which largely trades as a proxy for the price of bitcoin, lost 3%. The largest mining reserves, Digital marathon and Riot Platformslost 8% and 7% respectively. CleanSparkone of the best performing miners this year, tumbled 9%.

April could be a tumultuous one for cryptocurrencies and related stocks, especially mining stocks. Investors are eyeing the Bitcoin halving, which will reduce the reward and therefore the earnings of Bitcoin miners in the second half of the month. The event may hurt miners’ performance, but historically it has set bitcoin up for rallies of 300% or more in the coming months.

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