Bitcoin moved slightly on Tuesday, absorbing its recent losses as rising yields and continued US-Iranian tensions prompted investors to avoid higher-risk assets.
The world's largest cryptocurrency rose 0.6% to $83,637.10 by 9:07 AM. It had reached a high of $85,000.00 over the weekend before quickly retreating.
Markets drew some encouragement from the announcement by major US bank Citi that it is expanding its digital asset services in Japan and the United Arab Emirates, amid hopes that traditional financial institutions will further adopt this sector.
Revenues and tensions with Iran keep Bitcoin under pressure
Cryptocurrency markets were affected by a sudden sharp rise in US Treasury bond yields, as markets continued to price in expectations of an interest rate hike by the Federal Reserve.
Key employment data due this week is expected to shed more light on the path of interest rates, as any signs of strength in the U.S. labor market will bolster the arguments for further rate hikes.
Benchmark 10-year Treasury yields jumped to their highest level in 19 years in September, following the Federal Reserve's 25-basis-point interest rate hike and its adoption of a hawkish outlook in the face of rising inflation.
Adding to inflation concerns was a sharp rise in oil prices this week amid a lack of progress in US-Iranian negotiations. President Donald Trump on Monday denied reports that he had offered Iran concessions in exchange for assurances regarding the Strait of Hormuz and its nuclear ambitions.
Trump had previously rejected the latest Iranian peace proposal.
Saudi-Houthi tensions also continued, keeping markets on edge about the possibility of oil supply disruptions and limiting appetite for high-risk assets.
High interest rates cast a negative shadow on speculative assets such as cryptocurrencies, as they raise the opportunity cost of investing in this sector compared to debt instruments.
Senate report links Tether's USDT cryptocurrency to Iranian funding
A report released by US Senate Democrats on Monday revealed that Tether's USDT stablecoin has become a vital financial lifeline for Iran and a tool for funding proxy groups such as Hezbollah.
The report was overseen by Senator Richard Blumenthal of Connecticut, the ranking Democrat on the Senate Permanent Subcommittee on Investigations. It examined 846 digital wallets linked to Iran that were subject to Israeli and U.S. sanctions.
The report concluded that 84% of these wallets conducted transactions in USDT, including helping the Iranian government move money across its borders and support its currency in the face of US sanctions, including through the Central Bank of Iran.
USDT is the world’s largest dollar-backed stablecoin and has in the past come under intense scrutiny over potential transactions with entities subject to US sanctions.
Cryptocurrency prices today: Altcoins are rising
Cryptocurrency prices rose cautiously on Tuesday, partially recovering from losses suffered over the weekend.
Ether, the world's second-largest cryptocurrency, rose 1.8% to $2,698.46, while XRP added 1.6%.
Solana, Cardano and BNB all moved slightly.
In the meme currency market, Dogecoin rose by 1.5%, while $TRUMP fell by 1.3%.
