Bitcoin Trades Near $84,500 as Surging Treasury Yields and Geopolitical Tensions Weigh on Markets

Bitcoin edged higher on Tuesday, attempting to stabilize after facing downward pressure from a sharp rise in U.S. Treasury yields and persistent geopolitical tensions in the Middle East, which have dampened investor appetite for risk assets.

As of 9:25 AM ET, the world's largest cryptocurrency traded up 1.3% at $84,506, according to data from Investing.com. The move follows a brief test of the $85,000 level over the weekend before a subsequent retreat.

Macro Headwinds Cap Crypto Gains

The primary drag on the cryptocurrency market is the dramatic surge in U.S. government bond yields. The benchmark 10-year Treasury yield has climbed to its highest level in nearly 19 years, driven by investor expectations that the Federal Reserve will maintain its hawkish monetary policy to combat persistent inflation. The Fed raised rates by 25 basis points in September, signaling a higher-for-longer stance.

Market participants are now closely watching upcoming U.S. jobs data, as a strong labor market report could reinforce the case for further rate hikes. Higher interest rates on safe-haven assets like bonds increase the opportunity cost of holding non-yielding, speculative assets such as Bitcoin. Compounding these concerns, rising oil prices, fueled by slow-moving U.S.-Iran negotiations and regional tensions, are stoking fears of renewed inflation.

Senate Report Scrutinizes Tether

Adding to market unease, a report released Monday by U.S. Senate Democrats alleged that the stablecoin Tether (USDT) has become a "significant source of funds" for Iran and its proxy groups, including Hezbollah. The report, led by Senator Richard Blumenthal, stated that an analysis of 846 crypto wallets linked to Iran and sanctioned entities found that 84% had used USDT for transactions, allegedly to evade U.S. sanctions.

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USDT is the world's largest U.S. dollar-backed stablecoin and has previously faced scrutiny from regulators regarding its use by entities under U.S. sanctions.

Broader Crypto Market Edges Up

Despite the challenging macro environment, the broader cryptocurrency market saw modest gains on Tuesday, recovering some of the weekend's losses. A positive development came from news that Citigroup is expanding its digital asset services to Japan and the United Arab Emirates, fueling hopes for continued adoption by traditional financial institutions.

Other major cryptocurrencies also posted gains:

• Ethereum (ETH) rose 1.85% to $2,737.
• XRP increased by 1.67%.
• Solana (SOL) was up 1.6%.
• Dogecoin (DOGE) climbed 2.3%.