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Bitcoin, the largest cryptocurrency, fell 2.7% on Wednesday,
hitting its lowest level since October 2, 2023, as renewed attacks by Iran in the Strait of Hormuz dashed hopes that shipping traffic through the waterway would return to pre-war levels.
Brent crude oil rose above $102 a barrel, fueling concerns that higher energy prices could stoke inflation and lead to interest rates remaining high for longer.
Ether plunged 4.9%, XRP fell 3.8%, and Solana lost 2.1% as of 1:51 PM, as a wave of forced selling swept across cryptocurrency trading platforms.
Crypto-linked stocks also fell in pre-market trading: Coinbase Global Inc. dipped 2.3%, Robinhood Markets Inc. dropped 2%, and Block Inc. lost 0.7%.
Rising oil prices are fueling inflation fears and heightening expectations of interest rate hikes by major central banks, which could put pressure on cryptocurrencies.
Oil prices surged this week on fears of further supply disruptions in the Middle East, while adverse weather in the Gulf of Mexico also threatened U.S. production.
Government bond yields spiked amid the prospect of rate hikes. The yield on the 10-year U.S. Treasury note rose above 5.3%. While yields have eased slightly this week, they remain near recent highs, keeping pressure on cryptocurrencies. Bitcoin traded within a narrow range in October following a strong third quarter and remains well below the $126,000 peak reached a year ago. Hopes for more crypto-friendly regulation in the U.S. did little to drive up prices, while the cryptocurrency lagged behind record highs on Wall Street, where AI stocks were attracting the most attention.