Bitcoin fell to a two-week low of $62,000 on Tuesday, mirroring a broader sell-off in tech stocks as investors reassess risk amid expectations of interest rate hikes. The leading cryptocurrency dropped 4% in the past day, while Ethereum, XRP, and Solana each lost at least 5%, according to CoinGecko data.
Risk-Off Sentiment Spreads Across Markets
The decline in crypto coincided with pressure on Wall Street, where the tech-heavy Nasdaq was on track to fall 1.6%, dragged down by chipmakers like Micron Technology and SanDisk. Earlier, Asian indexes in South Korea and Japan also posted losses led by tech stocks. The risk-off mood extended to SpaceX, whose shares dropped 12% to $156.40, despite a recent post-debut rally.
“We’re seeing a bit of a sell-off in AI,” said Carlos Guzman, vice president of research at crypto trading firm GSR. “Crypto is reacting to that risk-off sentiment.” Investors are now digesting a growing consensus around rate hikes after a period of resilient tech gains amid Middle East tensions.
Fed Policy and Rate Hike Expectations Weigh
Kevin Warsh’s first remarks as Federal Reserve chair signaled a shift away from forward guidance, emphasizing the central bank’s commitment to taming inflation. Traders now expect the Fed to raise its benchmark rate to 3.75%-4% in July. Bank of America economists projected three hikes this year, lifting rates to 4.25%-4.5% by year-end, which typically weighs on risk assets as government debt becomes more attractive.
Gerry O'Shea, head of global market insights at Hashdex, said Bitcoin is likely to trade between $60,000 and $70,000 in this environment. “If people think we’re going into a hawkish environment, that can certainly hurt near-term prices for crypto and other risk assets,” he noted.
Potential Catalysts and Legislative Clock
Despite the downturn, O'Shea pointed to two potential catalysts: further de-escalation following a U.S.-Iran memorandum of understanding, and the Clarity Act, a sweeping crypto bill that would establish regulatory boundaries. However, time is running short for lawmakers to pass the bill before midterm elections in November. If it doesn’t pass by August, advocates warn its prospects could fade indefinitely.
On Hyperliquid, positioning has become “progressively more bullish,” according to Glassnode, citing an uptick in optimistic Bitcoin bets, suggesting some traders see the dip as a buying opportunity.