On the Chain: Bitcoin slips below US$79,000 as rate fears return

Bitcoin retreated below US$79,000 on Wednesday as investors reduced exposure to risk assets ahead of US inflation data and next week’s Federal Reserve interest-rate decision.

The world’s largest cryptocurrency was trading at about US$78,751, down 0.7%, after moving between an intraday low of US$77,680 and a high of US$79,432.

Ethereum was broadly steady at US$2,494.75, while Solana slipped 0.4% to US$103.71. XRP bucked the softer trend, gaining 1.4% to US$1.42.

The pullback follows Bitcoin’s brief move above US$82,000 last week, when falling bond yields and expectations that the Federal Reserve could leave rates unchanged encouraged renewed demand for risk assets.

Oil and rates weigh on crypto

Stronger US employment indicators and rising oil prices have since complicated the interest-rate outlook.

Higher energy costs could add to inflationary pressure, reducing the likelihood of near-term monetary easing and potentially forcing the Federal Reserve to maintain restrictive policy for longer.

Markets are now approaching the Fed’s September 16 decision with greater caution. LSEG data cited by Barron’s indicated traders were assigning a 57% probability to an interest-rate increase, helping push Bitcoin down from a recent three-month high of US$82,164. Barron’s