Bitcoin falls below $70,000 as rate hike bets and Strategy's MSCI exclusion hit crypto

Bitcoin falls below $70,000 as rate hike bets and Strategy’s MSCI exclusion hit crypto

Bitcoin dropped below $70,000 for the first time since mid-August as bets on more Federal Reserve rate hikes and Strategy's removal from MSCI indexes hit crypto demand. Ether, XRP and other major coins also fell and were headed for weekly losses.

Bitcoin fell 5.7% to $69,240.3 on Friday, slipping below $70,000 for the first time since mid-August. Growing bets on more interest rate hikes and concerns over Strategy's removal from MSCI indexes dented appetite for cryptocurrencies.

Rate hike bets weigh on crypto

The world's largest crypto was set to lose nearly 9% this week, its sixth straight week of losses. Markets were pricing in between 25 to 50 basis points of hike in December after October consumer inflation data read hotter than expected, CME Fedwatch showed.

Higher rates tend to pressure speculative plays like crypto by limiting market liquidity and drawing more capital towards safer bets, like government debt. Bitcoin has historically underperformed in high-rate environments.

Crypto markets also faced growing caution over the U.S. regulatory outlook after the Democratic party won majorities in both chambers of Congress. Several prominent Democrats have called for tighter anti-money laundering and risk management rules for crypto, a trend that could see Congress pass more stringent legislation on the industry.

Strategy's MSCI exclusion adds pressure

MSCI said the world's biggest Bitcoin treasury, and others like it, will be excluded from its benchmark indexes effective November 30. The move does not present immediate selling risks for Bitcoin, but it limits Strategy's ability to raise new capital, which has been the firm's main source of funding for its Bitcoin purchases.

As a result, Strategy could eventually sell more of its holdings, a move seen earlier this year, as it races to meet its mounting capital and debt obligations.

Altcoins track Bitcoin lower

Ether fell 4.6% to $1,950.56 and was down 13.2% this week. XRP fell 2.1% and was down nearly 12% this week.

Solana fell 3% and Cardano fell 0.9% on Friday, while BNB fell 4.8%. The three were down between 5% and 11% this week.

Source: Cryptocurrency News

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