Bitcoin drops on rising yields, dollar strength

Ether went down with it, shedding 5.6% to trade at $3,240.27

Bitcoin dropped for a second day to start the new month and quarter amid rising Treasury yields and strength in the U.S. dollar.

The flagship crypto currency dropped more than 4.76% on Tuesday to $66,134.00, bringing its two-day loss to 7%, per Coin Metrics. At one point it dropped as low as $64,572.00.

On Monday morning, it was trading at almost $70,000 before data came out showing growth in the manufacturing sector for the first time since September 2022 and investor bets on June rate cuts began to cool. Bitcoin is now down its all-time high, hit on March 14, by around 11%.

Ether went down with it, shedding 5.6% to trade at $3,240.27.

Meanwhile, the 10-year U.S. Treasury yield touched its highest level of the year and the dollar, which has an inverse relationship with bitcoin, touched a five-month high.

Bitcoin does not need much excuse to go through a period of correction after such an explosive performance in the first quarter, according to Joel Kruger, market strategist at LMAX Group. Having said that, U.S. economic data has been stronger of late, all while inflation continues to be a concern. This has resulted in a repricing of Fed expectations, translating to broad-based U.S. dollar demand on the more attractive U.S. dollar yield differentials.

Bitcoin’s move may have been exacerbated by a big bitcoin holder, or “whale,” who transferred over 4,000 bitcoin to the Bitfinex exchange late Monday night. According to data from CryptoQuant, a rise in that exchange’s reserves — which typically signals a jump in selling activity — that coincides with the sudden decline in bitcoin price late Monday night.

Stocks tied to the performance of bitcoin were dragged down but traded off their lows to end the day. Crypto exchange Coinbase dropped 2%, while software provider MicroStrategy, which largely trades as a proxy for the price of bitcoin, shed 3%. The biggest mining stocks, Marathon Digital and Riot Platforms, shed 8% and 7%, respectively. CleanSpark, one of the best-performing miners this year, slipped 9%.

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