Bitcoin fell on Monday, extending weekend losses, as rising Treasury yields and limited progress toward a peace agreement between the U.S. and Iran dampened appetite for riskier assets.
The world's largest cryptocurrency fell 1.7% to $83,418. Bitcoin strung together two consecutive weeks of gains driven by some optimism about the prospect of favorable regulations in the U.S.
The prices of cryptocurrencies in general also fell on Monday after two weeks of gains.
The rise in yields and tensions with Iran curb appetite for cryptocurrencies
Government bond yields rose worldwide as markets priced in further interest-rate hikes to curb accelerating inflation. The yield on the U.S. 10-year Treasury note topped 5%, reaching levels not seen since 2007, while yields in Japan surpassed 30-year highs.
The rebound in yields was driven mainly by growing conviction that the world’s major central banks will keep a restrictive policy after a series of rate hikes in September.
Both the Federal Reserve and the Bank of Japan raised rates in September and said they could take similar measures in the future due to concerns about persistent inflation. Higher interest rates are negative for speculative assets that do not yield, such as cryptocurrencies, as they limit market liquidity and make government debt safer and more attractive.
The increase in energy costs, stemming from the conflict between the U.S. and Iran, was one of the main drivers of inflation this year.
The conflict also weighed on risk markets, as the U.S. and Iran remain at an impasse around the Strait of Hormuz.
The U.S. president did not rule out the possibility of taking further military action against Iran in a weekend interview, after previously rejecting a peace proposal from Tehran.
Although negotiations between the two sides continue, it seems little progress has been made toward a concrete peace deal.
The continuation of hostilities between Yemen's Houthi forces, backed by Iran, and Saudi Arabia also supported oil prices, keeping fears of energy-driven inflation elevated.$BTC $ETH $PEPE
