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Market participants are currently factoring in rate increases, which may be impacting risk assets.
Bitcoin (BTC) price (CoinDesk)
Key points:
- Bitcoin retreated toward $69,000 on Tuesday as a wider pullback in risk assets impacted crypto markets.
- Circle, the stablecoin issuer, and the crypto exchange Coinbase experienced significant declines among digital asset-related stocks.
- Growing expectations of interest rate hikes by the Federal Reserve intensified risk-off sentiment, while Bitcoin maintained its recent trend of small gains on Mondays followed by minor declines on Tuesdays.
Bitcoin fell back toward $69,000 on Tuesday morning as a wider equity pullback influenced crypto markets.
After hovering around $71,000 earlier in the session, BTC dropped to approximately $69,600 during early U.S. trading hours, mirroring a general reversal in risk assets. Ether (ETH), Solana (SOL), and XRP (XRP) also decreased by 2%-3% over the past 24 hours.
Bitcoin seems to be continuing a familiar trend observed over the past three months, typically increasing by just over 1% on Mondays and then declining slightly under 1% on Tuesdays, according to Velo data.
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This movement coincided with a downturn in software stocks, as the iShares Expanded Tech-Software Sector ETF (IGV) fell roughly 4%. In recent months, crypto prices have closely mirrored this sector, both tracking lower since October. This correlation was once again evident, with digital assets declining alongside this specific tech area.
The S&P 500 and Nasdaq equity indexes were down 0.5% and 0.8%, respectively, relinquishing much of their gains from Monday following news regarding discussions between the U.S. and Iran. Global yields continue to rise, the DXY remains steady above 99, and oil prices have increased by 2% over the last 24 hours, reinforcing the overall risk-off atmosphere.
Equities related to crypto also faced downward pressure. Circle (CRCL), the issuer of the USDC stablecoin, led the declines, dropping 16% in a swift reversal after a recent rally that saw the shares rise over 100% in a month. Crypto exchange Coinbase (COIN) fell by 8%. These movements occurred following a report from CoinDesk on Monday that the latest iteration of the Clarity Act will not permit rewards on balances, limiting yields on stablecoins. “This undermines a key component of the bullish case by complicating USDC’s evolution from a payments utility to a genuine store-of-value asset,” said Shay Boloor, chief market strategist at Futurum Equities, in a post on X.
USDT issuer Tether, a significant competitor to Circle, also revealed that it has engaged a “Big Four” accounting firm for a comprehensive audit, viewed as a crucial measure to enhance confidence in USDT’s reserve assets.
Change in interest rate expectations
In one of the more notable reversals in recent times, market participants have shifted within weeks from discussing potential central bank rate cuts in 2026 to anticipating imminent rate hikes.
As per CME FedWatch, there is now no possibility of a rate cut at either the April or June Federal Reserve policy meetings, with approximately a 15% likelihood of a rate increase instead. The June Fed meeting would likely be chaired by Kevin Warsh, who has been nominated by President Trump to succeed Jerome Powell as head of the U.S. central bank, with the supposed aim of reducing borrowing costs.
