Bitcoin dropped Friday morning in Asia to trade below the US$27,000 support level. Ether also retreated and lost control of the US$1,600 mark for the first time in the past week. All other top 10 non-stablecoin cryptocurrencies logged losses in the past 24 hours. Solana led the losers with a slide of over 3%. The drop in crypto prices coincided with a decline Thursday in global equity markets as investors digested hawkish U.S. Fed remarks on monetary policy. U.S. stock futures were trading flat during opening hours in Asia after all three major U.S. indexes logged losses of over 1.0% Thursday.

Cryptos drop as US bond yields soar

Bitcoin fell 2.10% in the last 24 hours to US$26,580.90 as of 07:30 a.m. in Hong Kong, according to CoinMarketCap data. The world’s largest cryptocurrency fell to US$26,389.30 on Thursday night, its lowest level in a week.

After deciding to keep interest rates unchanged in September as expected, the U.S. Federal Reserve projected one more interest rate hike by the end of 2023. While it lowered its prediction for the pace of interest rate cuts in 2024, comments from Fed members were “more hawkish” than analysts expected.

Following the Fed meeting Wednesday, benchmark 10-year U.S. treasury yields rose to a 16-year high of 4.49% on Thursday.

“U.S. equity and rates markets have broken some very key levels on the back of this (Fed projection), and reflexivity can take over with the bearish thesis from here,” said digital asset trading firm QCP Capital in a Thursday Telegram market update.

The drop in equity markets and rising treasury yields “could seep into crypto markets and take BTC lower with it, albeit with a lower beta as compared to other very stretched macro markets like the NASDAQ,” said QCP Capital.

Despite macro pressures, Bitcoin can receive some support from the multiple spot Bitcoin exchange-traded fund (ETF) applications ongoing in the U.S., said Markus Thielen, head of research and strategy at digital asset service platform Matrixport.

“If the SEC approves a Bitcoin ETF, which we believe is a 70% probability over the next six months, then there could be an immediate re-pricing and Bitcoin could be +20% more expensive in an instant. Hence, it is essential to keep upside exposure to such an event,” Thielen said in an emailed comment.

Ether fell 2.35% to US$1,585.53 and was trading 2.66% lower for the week. The world’s second largest cryptocurrency fell below the US$1,600 support level for the first time since last Thursday.

All other top 10 non-stablecoin cryptocurrencies posted losses in the past 24 hours. Solana’s SOL led the losers, falling 3.73% to US$19.54. But it still posted a weekly gain of 3.35% 

Meanwhile, the collapsed Tokyo-based crypto exchange Mt. Gox delayed the deadline to repay its customers from October 2023 to October 2024, according to an announcement by Mt. Gox trustees on Thursday.

Around 850,000 Bitcoins (worth about US$22.57 billion at the current price) were stolen from Mt. Gox in 2014, which was then the largest crypto exchange in the world. The crypto exchange currently holds about 142,000 Bitcoins. Analysts expect the return of the lost Bitcoin to Mt. Gox customers will exert selling pressure on the wider Bitcoin market.

“(Mt. Gox’s delay) alleviates — at least for now — a wave of selling that many traders must have been prepping for and that can now be ignored,” said Justin d’Anethan, head of Asia-Pacific business development at Belgium-based crypto market maker Keyrock. 

Elsewhere, Tether Holdings, the issuer of the USDT stablecoin, expanded its USDT lending services during the latest financial quarter, less than one year after saying it would phase out the practice.

“Most investors and holders would see that as additional risk, as it means more assets will be used by third parties and, if market conditions were to turn for the worse, could pose liquidity issues,” said d’Anethan. 

USDT traded at US$1.0001 as of 07:30 a.m. in Hong Kong, slightly higher than its 1:1 peg to the U.S. dollar. The valuation suggests “investors are not worried and actually prefer it to most other stablecoin options,” said d’Anethan.

The total crypto market capitalization dropped 1.67% in the past 24 hours to US$1.05 trillion, while trading volume jumped 158.64% to US$72.41 billion.

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