Bitcoin and gold – traditionally viewed as alternative stores of value – are declining in tandem amid expectations of higher interest rates. On Wednesday, BTC traded at $61,233 (−3% in 24 hours, −6.9% weekly), while gold fell 2%, dropping below $4,200 per ounce.

Markets are penalizing non-yielding assets: when investors anticipate rate hikes, capital rotates into fixed-income instruments. This dynamic weighed on other cryptocurrencies as well: Ethereum fell 3.4% to $1,625, Solana dropped 4.1% to $64.24, and XRP declined 4.3% to $1.12. The weakest performer was Hyperliquid (HYPE): −10.2% daily and −21.3% weekly to $55.52.

The selloff backdrop was shaped by macro factors: South Korea's Kospi (most exposed to AI-themed chips) fell 6.3%, the MSCI Asia-Pacific broad index declined 2.5%, and Nasdaq 100 futures dropped 0.8%. U.S. 10-year Treasury yields rose to 4.54%, while Brent crude traded near $92/barrel amid geopolitical tensions.

The key driver is U.S. inflation data, which complicates the stance of new Fed Chair Kevin Warsh. If inflation remains elevated, rates could stay higher for longer, draining liquidity from assets dependent on "cheap money."

Monday's bounce, analysts note, was driven by a short squeeze (over $500 million in bearish positions liquidated – the highest since April), not a return of spot demand. "Buyers stepped in after the decline, but spot demand hasn't returned in a meaningful way," said Diana Pires, Chief Business Officer at sFOX, pointing to consecutive outflows from U.S. spot Bitcoin ETFs.

The key test ahead: can Bitcoin hold levels despite inflationary pressures, or will it continue moving tick-for-tick with tech equities? If gold stabilizes while Bitcoin keeps falling, the case for its use as a macro hedge weakens further.