Bitcoin Slides Below $79,000 as Rate Hike Fears and Oil Surge Weigh on Markets

Bitcoin fell on Tuesday, extending a retreat from a recent three-month high as macroeconomic pressures mounted on risk assets. The world's largest cryptocurrency traded down approximately 1.6% to $78,406.5, pulling back from a brief move above $82,000 last week, according to data from Investing.com.

Hawkish Fed Expectations Intensify

The primary catalyst for the downturn was a robust U.S. employment report from last Friday, which showed employers added 162,000 jobs in August, nearly triple what economists had forecast. The stronger-than-expected data has revived expectations for a more aggressive Federal Reserve policy stance.

Following the report, the market-implied probability of a 25-basis-point interest rate hike at the Fed's Sept. 16 meeting has risen to around 60%, according to the CME FedWatch tool. Higher interest rates typically weigh on non-yielding assets like Bitcoin by increasing the appeal of fixed-income investments and tightening overall financial conditions. The 10-year U.S. Treasury yield has climbed to around 4.8%.

Inflation Concerns and Market Outlook

Adding to investor concerns are surging energy prices. Brent crude oil rose to a six-week high of about $97.50 a barrel amid escalating U.S.-Iran tensions that raised fears of supply disruptions. Rising oil prices can fuel broader inflation, potentially keeping the Federal Reserve on a hawkish path.

Ad

Investors are now closely watching for U.S. producer price data on Thursday and consumer inflation figures on Friday for further clues on the Fed's next move. Despite the recent pullback, Bitcoin saw significant support in August, gaining roughly 25%. U.S. spot bitcoin ETFs have also provided a supportive backdrop, recording about $1 billion in net inflows last week for a third consecutive week of positive flows.

Altcoins Follow Bitcoin Lower

The cautious sentiment extended across the broader cryptocurrency market, with most major altcoins posting losses.

• Ethereum (ETH), the second-largest cryptocurrency, fell 1.3% to $2,466.92.
• XRP declined by 1.8% to $1.38.
• Other major tokens such as Solana (SOL) and Cardano (ADA) were down 2.3% and 1.1%, respectively.