The US dollar surges, BTC falls again. What do high interest rates mean for crypto companies?

• Bitcoin fell to $26,500 as interest rates, the dollar surged and stock markets fell.

• Edward Moya of Oanda said the Federal Reserve’s “long-term rate hike” stance weighed on cryptocurrency firms.

• According to QCP Capital, the stock sell-off could drag BTC prices lower.

Cryptocurrency markets fell on Thursday as investors digested hawkish comments from Federal Reserve Chairman Jerome Powell about keeping financial conditions tight and interest rates high for a long time.

Bitcoin (BTC) prices fell to around $26,600, down 1.5% over the past 24 hours, barely moved by positive news on delayed payments related to the Mt. Gox implosion, a long-standing source of panic selling pressure in digital asset markets.

Ethereum (ETH) fell below $1,600, extending its losses against BTC and falling to a fresh 14-month low against the asset. ETH is down 1.8% on the day, similar to the CoinDesk Market Index (CMI).

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

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

US stock sell-off could drag Bitcoin prices lower

The Federal Reserve is expected to raise interest rates once this year and cut them less sharply next year, which has stimulated traditional markets.

The 10-year Treasury yield surged to a 16-year high, while the DXY index, which measures the strength of the dollar against a basket of major currencies, jumped to around 106 at one point, the highest level since March when regional U.S. banking woes peaked.

U.S. stocks were sold off as a result, with the S&P 500 falling 1.6% and the tech-heavy Nasdaq Composite falling 1.8%.

Digital asset trading firm QCP Capital said that the pressure on the stock market caused by the Federal Reserve's strict policies could drag down cryptocurrency prices.

“Against this backdrop, the US equity and interest rate markets have breached some very critical levels that could take over the bearish thesis,” QCP wrote in a Telegram market update. “This macro move could filter through to the crypto markets and send Bitcoin lower with it, despite Bitcoin’s lower beta compared to other very nervous macro markets like the Nasdaq.”

US 10-Year Treasury Bond Rate (QCP Capital)

High interest rates put pressure on crypto companies: “Borrowing costs will remain high and refinancing will be a nightmare for crypto companies.” - Edward Moya, senior market analyst for the Americas at Oanda

Higher interest rates will also put pressure on struggling digital asset companies, pushing up their refinancing costs, said Edward Moya, senior market analyst at online brokerage platform Oanda.