Bitcoin drops as Treasury yields surge

Broader crypto prices also declined on Monday after two weeks of gains

Bitcoin slipped on Monday, extending losses from over the weekend as surging Treasury yields and few signs of progress towards a U.S.-Iran peace deal dented appetite for risk-driven markets.

The crypto dropped 1.5% to $83,416.1 by 21:44 GMT. Bitcoin is coming down from two straight weeks of gains on some optimism over favourable U.S. regulations.

Broader crypto prices also declined on Monday after two weeks of gains.

Government bond yields rose across the world as markets bet on more interest rate hikes to manage rising inflation. The 10-year U.S. Treasury yield climbed past 5% to levels last seen in 2007, while yields in Japan blew past 30-year highs.

The spike in yields was driven chiefly by growing conviction that some central banks will remain hawkish after a series of rate hikes in September.

Both the U.S. central bank and the Bank of Japan hiked rates in September and signalled more such moves due to concerns over sticky inflation. Higher rates bode poorly for speculative, non-yielding assets like crypto, given that they limit market liquidity and make government debt appear safer and more attractive.

Rising energy costs, stemming from the Iran-U.S. war, were a major driver of inflation this year.

The war was also a pain point for risk-driven markets, as Iran and U.S. remained at an impasse over the Strait of Hormuz.

While negotiations between both sides remained ongoing, there appeared to be little progress towards a concrete peace deal.

Continued hostilities between Yemen’s Houthis and Saudi Arabia also underpinned oil, keeping fears of energy-driven inflation high.