Bitcoin and Gold Decline Together as Investors Price in Higher Interest Rates

The recent relief rally that pulled crypto off last week’s lows is now fading, moving in step with declines in tech stocks and gold as markets brace for upcoming U.S. inflation data and expectations that the Federal Reserve under Kevin Warsh may stay hawkish.

Bitcoin’s rebound from last week’s low is unwinding, with both BTC and gold moving lower together.

Bitcoin last changed hands at $61,233, down 3% on the day and 6.9% on the week. Gold also slipped about 2%, falling below $4,200 an ounce. Markets are increasingly pricing in higher interest rates, which tends to pressure non-yielding assets like Bitcoin and other cryptocurrencies.

Ethereum fell 3.4% to $1,625, while Solana dropped 4.1% to $64.24. XRP declined 4.3% to $1.12, and both BNB and Dogecoin eased by under 3%. Hyperliquid’s HYPE token led losses among major assets, falling 10.2% on the day and 21.3% on the week, reflecting its higher volatility.

Equities also came under pressure. South Korea’s KOSPI, heavily exposed to the AI and semiconductor trade, dropped 6.3%, dragging MSCI’s Asia-Pacific index down 2.5% for a fourth decline in five sessions. Nasdaq 100 futures were also weaker, down 0.8% after a volatile trading session. Brent crude traded near $92 per barrel amid renewed U.S. strikes on Iran, while the 10-year Treasury yield climbed to 4.54%.

Gold and Bitcoin rarely move together, but both are now under pressure as rising rate expectations reduce demand for non-yielding assets. Wednesday’s U.S. inflation report could reinforce that trend.

A stronger CPI reading would support expectations that Federal Reserve Chair nominee Kevin Warsh may keep rates higher for longer, tightening liquidity conditions that have historically fueled risk-asset rallies.

The recent bounce was largely driven by a short squeeze rather than fresh demand, with more than $500 million in bearish positions wiped out—the largest such event since April.

However, some market participants argue that underlying spot demand has yet to return meaningfully.

“Buyers have stepped in after the move lower, but spot demand has yet to return in a meaningful way,” said Diana Pires, chief business officer at sFOX, noting ongoing outflows from U.S. spot Bitcoin ETFs that continue to limit institutional support. Without stronger inflows, she added, rallies may struggle to hold.

The key question now is whether Bitcoin can hold its ground through the inflation print or continue tracking equity markets lower. If gold stabilizes while Bitcoin keeps falling, its case as a macro hedge could weaken further.