The surge of the US dollar and the further decline of BTC, what does the high interest rate mean for cryptocurrency companies?

US dollar surge, BTC decline, implications of high interest rates for crypto companies?

Author: Krisztian Sandor, CoinDesk; Translation: Song Xue, LianGuai

• As interest rates rise, the US dollar soars, and the stock market falls, Bitcoin has fallen to $26,500.

• Edward Moya of Oanda said that the Fed’s “long-term rate hike” stance has put pressure on cryptocurrency companies.

• According to QCP Capital, stock sell-offs could drag down BTC prices.

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The cryptocurrency market fell on Thursday as investors digested the impact of Federal Reserve Chairman Jerome Powell’s tough comments on maintaining financial conditions and keeping interest rates high.

Bitcoin (BTC) fell to around $26,600, down 1.5% in the past 24 hours, almost unaffected by positive news of delayed payments related to the Mt. Gox explosion, a long-term root cause of panic selling pressure in the digital asset market.

Ethereum (ETH) fell below $1,600, continuing the downward trend of BTC, and the asset against Bitcoin fell to a 14-month low. ETH fell 1.8% on the day, similar to the CoinDesk Market Index (CMI).

Cryptocurrency companies suffered even greater losses. Solana’s SOL, Polygon’s MATIC, Lido’s LDO, and Optimism’s OP all fell 3% to 5% on the day.

In the cryptocurrency industry, CoinDesk’s Culture and Entertainment Index (CNE) rose against the trend by 1% due to the strong performance of the native token (IMX) of the non-fungible token (NFT) platform ImmutableX.

Stock sell-offs could drag down Bitcoin prices

The Fed is expected to raise interest rates once this year and the rate cut next year will be smaller, which has stimulated the traditional market.

The 10-year Treasury bond yield rose to a 16-year high, and the DXY index, which measures the strength of the US dollar against a basket of major currencies, briefly jumped to around 106, the highest level since the peak of the US regional banking crisis in March.

As a result, the US stock market was sold off, with the S&P 500 index falling 1.6% and the tech-heavy Nasdaq Composite index falling 1.8%.

QCP Capital, a digital asset trading company, said that the strict policies of the Fed could put pressure on the stock market and drag down cryptocurrency prices.

“In this context, the US stock market and interest rate market have already broken through some very critical levels, and may take over the bearish argument,” QCP wrote in a Telegram market update. “This macro measure may permeate the cryptocurrency market and cause Bitcoin to fall, although compared to other very volatile macro markets such as Nasdaq, Bitcoin has a lower beta coefficient.”

US 10-year Treasury Bond Yield (QCP Capital)

High interest rates bring pressure to cryptocurrency companies: “The cost of borrowing will remain high, and refinancing will be a nightmare for cryptocurrency companies.” – Edward Moya, Oanda Senior Market Analyst for the Americas

Edward Moya, Senior Market Analyst for the Americas at online brokerage platform Oanda, said that higher interest rates will also bring pressure to struggling digital asset companies, pushing up their refinancing costs.

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