A Bitcoin logo inside a BitBase cryptocurrency exchange in Madrid, Spain, Thursday, March 17, 2022.
Angel Navarrete | Mayor Bloomberg | fake images
The bitcoin price was lower on Monday as investors weighed in on the risks of rising rates and the potential for further tightening by the Federal Reserve.
Bitcoin the last time it fell 5.4% to $40,901.76, according to Coin Metrics. Earlier in the day it fell below $40,880 to its lowest level since March 20.
The drop came after the 10-year Treasury yield hit a three-year high of 2.77% overnight. Riskier assets tend to fall when yields rise. On Monday, the tech-heavy Nasdaq Composite fell more than 1%.
Although bitcoin should trade independently of the stock market, the correlation between the two has been particularly high in recent months.
"Bitcoin and traditional markets have continued to respond negatively to expectations that the US Federal Reserve will tighten monetary policy to combat inflation, and Tuesday's CPI release appears to carry heavy weight," said Riyad Carey, Kaiko Research Analyst. "Globally, the ongoing war in Ukraine and the ever-increasing lockdowns in China are dragging down markets."
Carey also noted the market reaction to Terraform Labs buy bitcoin in troves for its stablecoin reserves, which it has around 40,000 bitcoins after buying $175 million over the weekend, has been โlargely depletedโ. Two weeks ago, Bitcoin broke above the $48,000 level, turning positive for the year, as the group behind Terra Stablecoin stepped up their Bitcoin buying.
Tokens in the cryptocurrency market were also lower. Ether it decreased 7.2% along with other platform networks, according to Coin Metrics. Solana, Algorand, and Cardano tokens fell more than 9% in the last 24 hours.
The DeFi, or decentralized finance, sector also fell. Aave, Compound and SushiSwap lost more than 9% and Maker fell 8% in a 24-hour period.
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