Bitcoin drops below $70,000 as Circle’s 16% plunge sparks a crypto stock sell-off.

Bitcoin drifted lower on Tuesday as weakness in traditional markets spilled into crypto, with shifting interest rate expectations adding pressure to risk assets.

After briefly trading near $71,000 earlier in the day, bitcoin (BTC) slipped back toward $69,000, hovering around $69,600 during early U.S. hours. The broader crypto market followed suit, with ether (ETH), solana (SOL) and XRP each declining between 2% and 3% over the past 24 hours.

The move continues a recent pattern observed over the past few months, where bitcoin tends to post modest gains on Mondays before giving some of that back on Tuesdays, according to Velo data.

Equity markets also turned lower, particularly in the tech sector. The iShares Expanded Tech-Software Sector ETF (IGV) dropped roughly 4%, extending a downtrend that has closely mirrored crypto’s performance since October. Digital assets have increasingly traded in tandem with software stocks, and Tuesday’s pullback reflected that correlation once again.

Broader benchmarks also weakened, with the S&P 500 and Nasdaq falling 0.5% and 0.8%, respectively, erasing much of Monday’s gains tied to developments around U.S.-Iran talks. At the same time, global bond yields continued to rise, the U.S. dollar index held firm above 99, and oil prices climbed another 2%, reinforcing a risk-off environment.

Crypto-related equities were hit even harder. Circle (CRCL), the issuer of the USDC stablecoin, plunged 16% after a strong rally that had seen the stock more than double over the past month. Coinbase (COIN) also declined 8%. The sell-off followed reports that the latest version of the Clarity Act may restrict rewards on stablecoin balances, potentially limiting yield opportunities. Analysts noted this could weaken the long-term investment case for USDC by making it harder to evolve beyond a payments-focused asset.

Meanwhile, rival stablecoin issuer Tether announced it had engaged a Big Four accounting firm to conduct a full audit of its reserves, a move aimed at strengthening confidence in USDT.

Underlying the broader market pressure is a sharp shift in interest rate expectations. In a matter of weeks, sentiment has flipped from anticipating multiple rate cuts in 2026 to pricing in the possibility of hikes.

Data from CME FedWatch now shows virtually no chance of rate cuts at the Federal Reserve’s April or June meetings, with roughly a 15% probability of a rate hike instead. The June meeting could be led by Kevin Warsh, whom President Donald Trump has nominated to replace Jerome Powell as Fed chair, signaling a potentially different policy direction ahead.