Bitcoin prices fell sharply on Friday, while ether prices also dived, wiping off nearly $150 billion from the crypto market.
The declines in cryptocurrencies follow Wall Street losses on Thursday. The Nasdaq Composite lost 7.6% this week, and the S&P 500 fell 5.7% for its third straight weekly decline.
Rising rates have prompted investors to shed positions in riskier assets. Earlier this week, the benchmark 10-year Treasury yield traded above 1.9%.
The Federal Reserve have also indicated it plans to begin reducing its balance sheet, as well as tapering of bonds and raising interest rates.
A common investment case for bitcoin is that it serves as a hedge against rising inflation as a result of government stimulus, but analysts are saying the risk is that a more hawkish Federal Reserve may take the wind out of bitcoin’s sails.
As yields pulled back later in the week, however, foreign exchange trading firm Oanda senior market analyst Edward Moya said it was “a little disappointing to not see bitcoin react more positively to the reversal in Treasury yields.”
Bitcoin prices have fallen sharply since November, tumbling more than 40% from a record high of about $69,000.
In a Thursday note, Oanda’s Moya had predicted that bitcoin could tumble below $40,000 as Russia’s central bank had proposed a ban over the use and mining of cryptocurrencies on Russian territory, claiming the digital currency poses a risk to “financial stability and monetary policy sovereignty.”
Russia is among the top three countries for bitcoin mining, he noted.
— CNBC’s Ryan Browne contributed to this report.
Correction: This article has been updated to reflect that bitcoin’s all-time high in November was about $69,000.