Fed Fears Spook Bitcoin as BTC Slips Below $66K While Wall Street Yields Steal the Show

Bitcoin (BTC) traded just under $66,000 on Thursday after a sharp sell-off pushed the price to a session low of $65,400, as rising U.S. Treasury yields and renewed fears over the Federal Reserve's policy path weighed on risk assets across the crypto market. The 10-year U.S. Treasury yield climbed above 4.2%, its highest level in over a month, reinforcing concerns that the Fed may keep interest rates elevated for longer than markets had anticipated.

The downturn in crypto came alongside broad weakness in equities, with the Nasdaq 100 falling 1.8% and the S&P 500 shedding 1.2% on the same session. Analysts pointed to a combination of hawkish Fed rhetoric and stronger-than-expected U.S. economic data as the main catalysts behind the cross-asset sell-off. "The market is repricing the duration of Fed tightening, and crypto is not immune to that dynamic," one macro strategist noted.

Bitcoin's drop extended a volatile stretch for the asset, which has struggled to hold above the $67,000 level despite ongoing inflows into spot BTC exchange-traded funds. According to data from CoinShares, U.S. spot Bitcoin ETFs recorded $112 million in net inflows on Wednesday, suggesting institutional demand remained intact even as prices softened. Trading volumes on major exchanges including Coinbase and Binance spiked by more than 40% during the sell-off.

Ethereum (ETH) mirrored Bitcoin's losses, falling 3.4% to around $3,180, while Solana (SOL) declined 5.1% to $142. The wider altcoin market was broadly red, with total crypto market capitalization contracting by approximately 2.6% to $2.27 trillion. On-chain data from Glassnode showed that Bitcoin's realized volatility climbed to 48, its highest reading since March.

Looking ahead, traders are focused on Friday's release of the U.S. Personal Consumption Expenditures (PCE) inflation report, which is widely viewed as the Fed's preferred inflation gauge. A hotter-than-expected print could put further pressure on risk assets, while a softer reading may ease rate-path concerns and provide relief for the crypto market. Until then, Bitcoin's path back above $67,000 is likely to hinge on yields and the data flow from Washington.