Bitcoin fell during early trading in Asia, dipping close to $65,000 as concerns over persistent high US interest rates shook risk-taking. Investors are wrestling with a mix of rising Treasury yields, climbing oil prices, and firm signals from the Federal Reserve, all contributing to a cautious mood on asset markets.
Two-year US Treasury yields reached 4.31%, their highest since early 2025, while 10-year yields pushed up to 4.66%. Meanwhile, crude oil prices surged above $88 per barrel recently, fueling inflation worries. These inflationary pressures could keep the Fed on a tightening path, making borrowing costlier for longer.
Market dynamics adding to crypto volatility
The latest inflation data, including Consumer Price Index and PCE figures, alongside hawkish Fed commentary, have unsettled investors. Market probabilities for a rate hike before the upcoming July Federal Open Market Committee meeting are fluctuating between 14% and 37%, revealing uncertainty about whether the Fed will pause or increase rates.
Bitcoin’s journey this year has been volatile. After peaking in late 2025, it dropped sharply in June, breaching $60,000 amid broader tech sell-offs and geopolitical tensions involving the US and Iran. That slump wiped out over half of its recent gains. Although Bitcoin has clawed back some ground, moving within the low to mid-$60,000 range, the recovery remains fragile.
Adding to the complexity, shifts in the yen carry trade and policy signals from the Bank of Japan have affected global liquidity flows, influencing crypto markets in subtle ways.
With government bonds now yielding over 4%, the allure of Bitcoin, an asset without yield and notable price swings, is diminished. Institutional investors appear to be reallocating capital toward safer bets, impacting trading volumes and positioning.
