Between credit stress concerns, a hot PPI inflation reading, and tensions between U.S. and Iran, investors have plenty of reasons to stay away from risk assets.
What to know:
- Bitcoin slid back below $66,000, erasing most of its midweek gains as major cryptocurrencies and crypto-related stocks fell alongside a broader risk-off move in markets.
- Hotter-than-expected January U.S. producer price inflation pushed expectations further back for interest rate cuts, while widening credit spreads and sharp declines in private-equity firms point to mounting worries about credit stress.
- Traders are positioning for bitcoin to remain range-bound between $72,000 and $54,000 in March, one analyst said.
itcoin BTC$65,723.04 fell back below $66,000 Friday in the early U.S. session as mounting macro risks are spooking investors away from risky assets.
The largest crypto now has erased most of Wednesday’s surge, plunging 3% from around $68,000 in the past few hours to $65,600 in the morning hours. The braod-market CoinDesk 20 Index was 2.3% lower in the past 24 hours, with ether (ETH), XRP (XRP) and solana (SOL) down similar amounts.
Crypto-related stocks also followed the move, giving up part of the gains earlier this week. Strategy (MSTR), the largest corporate bitcoin holder, slipped 3%, while Coinbase (COIN) was more than 2% lower. Stablecoin issuer Circle (CRCL), declined almost 5%%, snapping its rebound that saw the stock gaining nearly 50% in a couple of sessions.
Miners, increasingly linked to AI infrastructure buildout, performed even worse, with IREN (IREN), Cipher Mining (CIFR), Core Scientific (CORZ) and TeraWulf (WULF) losing 6%-8%.
The action occurred as U.S. equity indexes fell, with the Nasdaq down 0.8% and the S&P 500 lower by 0.6%.
In the backdrop, there was a mix of risks for investors to get concerned about.
A hotter-than-expected Producer Price Index (PPI) inflation reading for last month spooked those who hoped for a continuation in the cooling inflation trend. In January, core PPI rose 3.6% year over year, above the 3.0% estimate, and up from 3.3% previously. Markets are now pricing in a 96% chance of no rate cut for the March 18 Federal Reserve meeting.
Concerns about stress in the credit markets also linger, with credit spreads at their widest in four months. Private equity firms KKR (KKR), Ares (ARES) and Apollo Global Management (APO) plunged 6%-7% to fresh lows during the session.
On top of that, prediction market odds of U.S. strikes against Iran rose this morning after the U.S. has begun evacuating embassy staff from Israel.
Money flows to safe-havens
In fixed income, the U.S. 10-year Treasury yield has slipped below 4% for the first time since November 2024. Precious metals continue to rally, with gold up 1% to above $5,230 an ounce, while silver has surged 4% to trade back above $92. Meanwhile, crude oil jumped 2.3% to above $67 a barrel.
Bitcoin’s upside looks capped with prices likely remain rangebound given the risk-off mood, Paul Howard, director at trading firm Wincent said. Following the February options expiry, traders are position for BTC to remain below $72,000-$74,000 with support at around $54,000 through March, he added.
“A cautious approach still appears warranted, particularly given that March has historically been a weaker month for crypto majors,” Howard said.
Read more: The worst may lie ahead. Bitcoin chart revisits historic pattern
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Bitcoin falls with ether, solana while decred, AI-linked tokens advance
Positioning in futures and options shows traders looking to protect against further declines.
What to know:
- Bitcoin is facing renewed selling pressure, dropping 2% in 24 hours, with ether, XRP, solana and the CoinDesk 20 Index (CD20) registering similar losses.
- Positioning in futures and options shows traders looking to protect against further declines.
- Internet computer, render and bittensor were among AI-related tokens to benefit from renewed investor interest in the sector, boosted in part by Nvidia’s earnings report.
