Cryptos Slip While Dollar, Oil, Yields Climb

Amidst renewed geopolitical tensions in the Middle East and a surge in crude oil prices, bond yields and the U.S. dollar that followed, cryptocurrencies have slipped into negative territory. Overall cryptocurrency market capitalization has declined 1.4 percent overnight to $2.86 trillion while Bitcoin is trading with overnight losses of 1.6 percent.

Tensions escalated in the Middle East amidst President Donald Trump rejecting an Iranian peace proposal to reopen the Strait of Hormuz. Both the crude oil benchmarks recorded sharp increases before easing slightly amidst fresh hopes of a diplomatic resolution.

The dollar's strengthening also dampened crypto market sentiment. The six-currency Dollar Index which measures the U.S. Dollar's strength against a basket of 6 currencies is currently trading at 101.20, implying an overnight surge of 0.23 percent.

Worries about fuel-led inflation lifted bond yields higher across regions and tenors. Ten-year U.S. bond yields rose to levels last seen in 2007. Simultaneously, the likelihood of a quarter percentage rate hike by the Fed in October has increased to 65.9 percent from 64.2 percent a day earlier. Sentiment in crypto markets remained impacted as the spike in yields increased the opportunity cost of holding cryptocurrencies which do not yield interest income.