The 100 dollar oil price has once again set off a storm in yield! US bond yields and the US dollar both strengthened, and Bitcoin faced a major stress test after an eight-month high

The Zhitong Finance App learned that cryptocurrencies such as Bitcoin and Ethereum collectively declined on Thursday, cooling down the recent gains that have pushed Bitcoin to an eight-month high. After Bitcoin rose 9% in the past week, broke through $87,000 earlier this week, and hit an eight-month high, it began to bear the pressure of rising international oil prices and long-term US bond yields to strengthen at the same time as the US dollar, driven by rising international oil prices and continuing to hover above $100. The $100 oil price can be described as introducing global macroeconomic pressure into the crypto market.

On Thursday, Bitcoin once fell 1.6% to $82,882 on the same day, while Ethereum and other major cryptocurrencies also declined. This round of adjustment was accompanied by the weakening of the stock market, reflecting investors' behavior of cashing in on recent gains and adjusting risk exposure when US dollar financing conditions became tighter. However, the market still has a positive judgment on whether the rebound will continue: Bitcoin previously broke through the 50-week moving average, providing trend traders with technical signals to support the rise; as a result, some analysts understood this pullback as a consolidation in the middle of the rise. The next pricing focus is on whether macro pressure can be mitigated and position adjustments after the expiration of about $15 billion of Bitcoin options on Friday.

The direct catalyst for the new rise in international oil prices is a strong signal sent by the US and Iran during the UN General Assembly, and the conditions for the resumption of normal navigation in the Strait of Hormuz have not been implemented. On September 23, Iranian President Masood Pezzahizyan stressed in New York that Iran will not give in to pressure from the US, but still believes in diplomacy; this statement responds to Trump's military threat the day before. Iran's security chief Mohsin Rezai also said that Iran will not reopen the strait until conditions are met.

Meanwhile, Iranian Foreign Minister Abbas Alagzi and US envoys Steve Vitkov and Jared Kushner have exchanged information through Qatari intermediaries to discuss the reopening of the straits and the lifting of the US maritime blockade on Iranian ports, but there are still clear differences between the two sides. This means that diplomatic contacts have yet to be translated into enforceable transportation restoration arrangements, and the market still needs to price the uncertain energy supply in the Gulf.

Price changes show that this round of energy shock is already quite large: the settlement price of Brent crude oil on September 23 rose 3.86% to $103.08 per barrel; based on the recent monthly contract settlement price for each trading day, it rose about 42.2% from $72.48 on February 27, the last trading day before the outbreak of the war, and about 11.8% from $92.17 on August 24. At 17:40 Beijing time on September 24, Brent rose further to 105.51 US dollars, up 2.36% on the same day. Although it briefly fell below $100 during this period, the subsequent rapid rebound showed that the market's optimistic expectations for supply recovery were still easily interrupted by differences in negotiations.

The anchor rise in global asset pricing: How the dollar and 10-year US Treasury yield curves reduce the upward space for crypto assets

What is currently traded in the market is the possibility of further policy tightening after the Federal Reserve raises interest rates. The Federal Reserve raised interest rates by 25 basis points on September 16, raising the federal funds rate target range to 3.75% — 4.00%. Subsequently, the better-than-expected US purchasing managers' index, undertaking weak treasury bond auctions, and Federal Reserve Governor Michael Barr's statement on further interest rate hikes all strengthened expectations of austerity. According to market pricing on the morning of September 24, the probability of another rate hike in October is close to 70%, up from about 50% a week ago; the US dollar index remained at a two-month high around 101.08. The core logic is that energy price shocks are compounded by economic demand that is still resilient, causing the market to adjust the future policy interest rate path and increase the relative return appeal of US dollar assets.

The long-term bond market is also being repriced. In early European trading on September 24, the 10-year US Treasury yield once reached 5.145%; the 30-year yield once rose to 5.444%, the highest level since 2004. Looking at the fixed-income pricing mechanism, the yield on long-term treasury bonds can be split into the expected average of future short-term interest rates and the term premium: the former reflects how high and how long the market expects the Federal Reserve to maintain interest rates, while the latter compensates investors to bear the risk of long-term inflation and interest rate uncertainty. Energy inflation affects the pricing of these two components, while government debt supply and other financing needs also affect the allocation of long-term capital. As a result, the rise in long-term yields reflects common changes in policy paths, growth resilience, and compensation required to hold long-term bonds.

This change is transmitted to the crypto market mainly through three channels: opportunity cost of ownership, financing conditions, and cross-asset risk budgeting. Bitcoin itself does not generate interest income. When tight expectations increase the return appeal of cash and short-term US dollar assets, the expected return required for investors to hold Bitcoin will also increase; rising US dollar financing costs may reduce the appeal of leveraged strategies.

When stocks and bonds fluctuate at the same time, cross-asset investors may also reduce their overall risk exposure, making crypto assets that previously had a large increase in profit settlement targets. Research by the Bank for International Settlements also found that monetary policy tightening is often accompanied by a decline in risk taking in the crypto market. Therefore, the essential logic behind the pullback in risky assets such as Bitcoin in this round is the result of tightening global financial conditions transmitted to crypto assets, and the short-term trend is still sensitive to US dollar liquidity and capital costs.

Retracement after an eight-month high

The momentum driving Bitcoin to an eight-month high has cooled significantly recently. The world's largest cryptocurrency once fell 1.6% to $82,882, having previously risen above $87,000 earlier this week. Ether, the second-largest cryptocurrency, fell to around $2,628. Prices of smaller cryptocurrencies such as XRP, Solana, and Zcash have also declined.

Broader market factors are putting pressure on risky assets, prompting some investors to settle profits after the recent rise in cryptocurrencies. However, some analysts believe that this pullback is only temporary, and there is still room for the cryptocurrency to rise further.

Alex Kupzikevich, chief market analyst at FxPro, said that factors such as the strengthening of the US dollar, soaring bond yields, and falling stock prices triggered the end of this profit. He said, “Despite the pullback, the upward trend continues and has not yet ended, which indicates that this pullback may only be a temporary pause in the upward trend.”

In the recent round of gains, cryptocurrencies have escaped the impact of a range of potential downsides, including the failure of US lawmakers to push forward the market's long-awaited legislation on the structure of the cryptocurrency market.

“The cryptocurrency market has performed quite well over the past few weeks,” said Rajiv Sony, head of international portfolio management at Wave Digital Assets. He added that Bitcoin broke through the 50-week moving average last Friday, allowing traders to confirm that this round of gains “still has momentum.”

For Bitcoin investors, chances of a profit settlement were rare; after months of stagnation, Bitcoin has risen 9% over the past week.

“Bitcoin has dropped more because it has risen more before,” said Ivan Lee, head of trading at QCP Capital. “In fact, it's trending in line with other assets.”

Investors are currently watching global market trends to find clues to the next wave of relationships.

With futures falling 0.6%, the S&P 500 looks set to spit out almost all of this week's gains. Nasdaq 100 futures fell 1% at a time when chip stocks were hit hard. Meanwhile, the long-term sell-off of US Treasury bonds continues. The yield on 30-year Treasury bonds has risen to the highest level since 2004, and the US dollar is expected to record the longest continuous rise since May.

Cryptocurrency traders are also watching the quarterly expiration of approximately $15 billion of Bitcoin options contracts on the Deribit Exchange, with more than one-third of open positions due to expire on Friday. The ratio of put options to call options — a much-publicized measure of the number of options granting the right to sell compared to the number of options granting the right to buy — is 0.70, indicating a higher number of contracts betting on price increases.