Growing expectations that the U.S. Federal Reserve will raise interest rates later this year is hurting the prices of cryptocurrencies such as Bitcoin (BTC), say analysts.
Currently, financial markets are pricing in one 25 basis point interest rate hike from the U.S. Federal Reserve this December. There are no rate cuts expected in 2026.
Analysts say Bitcoin and gold are falling together as expectations for higher interest rates grow, sapping demand for non-yielding assets such as cryptocurrencies.
To be sure, other factors are also weighing on Bitcoin and cryptocurrencies such as Ethereum (ETH).
These include a rotation of investor capital into artificial intelligence (A.I.) stocks and continued outflows from spot Bitcoin exchange-traded funds (ETFs).
However, growing expectations for interest rate increases are adding to the downward pressure on cryptocurrencies, say analysts.
Traders and investors will be watching the latest U.S. inflation report on June 10 closely and its implications for Federal Reserve policy and the outlook for interest rates.
Inflation in the U.S. has been steadily rising as the Iran war pushes gasoline prices higher.
Bitcoin is currently trading at $61,250 U.S., having fallen more than 10% in the past week.
