The price of Bitcoin (BTC) continued to face pressure on Tuesday, trading at $26,200, as concerns about higher interest rates weigh on financial markets. The CoinDesk Market Index (CMI) was down 0.6%, slightly underperforming the decline in Bitcoin.
One significant factor contributing to this pressure is the U.S. 10-year Treasury yield, which reached 4.55%, matching its highest level in around 16 years. At the beginning of September, the yield on the 10-year note was at 4.18%. This sharp increase in interest rates is having a significant impact on equity markets, particularly the Nasdaq, which was down 1.1% on Tuesday, marking its weakest level in nearly four months. The S&P 500 also experienced similar declines, matching levels not seen since early June.
The CEO of JPMorgan, Jamie Dimon, expressed concern about the potential consequences of further interest rate hikes. Dimon stated earlier on Tuesday that he was unsure if the world is prepared for a 7% interest rate. He acknowledged that the previous rise in the U.S. Federal Reserve’s benchmark fed funds rate from 0% to 2% was manageable, but the subsequent increase to the current range of 5.25% to 5.50% caught many market participants off guard. Dimon cautioned that a rise to 7% would be unexpected and could lead to stresses in the system, potentially pushing the U.S. economy into a recession.
These concerns about rising interest rates and their potential impact on the economy and financial markets are likely contributing to the downward pressure on Bitcoin and the broader cryptocurrency market. Investors tend to view Bitcoin as a high-risk asset, and uncertainty and volatility in other markets can lead them to reduce their exposure to such assets.
It remains to be seen how further interest rate hikes will impact Bitcoin and whether the cryptocurrency market can withstand the potential stresses in the system. As the situation unfolds, it is crucial for investors to carefully monitor market developments and adapt their strategies accordingly.
