Dow, Nasdaq, and crypto all slip as treasury yields climb on delayed cut bets

Anndy Lian
Dow, Nasdaq, and crypto all slip as treasury yields climb on delayed cut bets

We took a hit from recent economic data that stirred up doubts about the timing of interest rate cuts. Investors faced a mix of signals from the US economy, which showed strength in some areas but left questions about inflation and labour trends. The Labour Department noted that initial jobless claims fell by 14,000 to 218,000 for the week ending September 20, beating what analysts expected.

At the same time, revised figures indicated the economy expanded at a 3.8 per cent pace in the second quarter, up from the earlier estimate of 3.3 per cent, thanks to robust consumer spending and business investments. These numbers painted a picture of resilience, yet they prompted traders to dial back bets on quick rate reductions.

The odds of a cut in December dropped by 20 per cent, and for January 2026, they fell by 30 per cent. Attention now turns to the Personal Consumption Expenditures price index set for release on Friday, which investors see as a key gauge for the Federal Reserve’s next moves on rates.

Wall Street pulls back as yields climb

Wall Street extended its slide for a third day on Thursday, with the Dow Jones dipping 0.38 per cent, the S&P 500 losing 0.50 per cent, and the Nasdaq also down 0.50 per cent. Fading hopes for imminent rate cuts fuelled the pullback, as participants adjusted portfolios amid the uncertainty.

Treasury yields climbed, reflecting expectations of rates staying higher for longer. The 10-year yield added 2.3 basis points to close at 4.170 per cent, while the two-year yield jumped 5.1 basis points to 3.655 per cent. The dollar strengthened, with its index rising 0.69 per cent to 98.553, bolstered by the solid economic readings.

Gold edged up 0.4 per cent to US$3,749.44 per ounce, drawing support from increased physical demand despite the dollar’s gain. Brent crude oil ticked higher by 0.2 per cent to US$69.42 per barrel, holding steady amid global energy flows.

Asian stocks closed mixed on Thursday due to some profit-taking, and they showed varied performance in early Friday trading. Futures pointed to a lower open for US equities, suggesting the cautious mood would carry over.

Crypto market hit by liquidations

The cryptocurrency market endured a sharp 3.01 per cent drop over the past 24 hours, building on a 7.22 per cent decline over the last week. Several factors converged to drive this downturn, including wavering Federal Reserve signals, massive liquidations totalling US$1.5 billion, and breakdowns in key technical levels.

The Fed’s initial rate cut on September 17 sparked a brief rally, but Chair Powell’s comments on September 24 about potential labour risks and persistent inflation flipped the script, leading to risk-averse behaviour across assets. Traders currently assign a 91.9 per cent probability to another cut in October, according to Bitget News, but the crypto sector’s growing tie to traditional markets amplified the fallout.

Its correlation with the Nasdaq-100 reached +0.65 over the last day, making digital assets particularly exposed to broader economic jitters. This setup left crypto in a vulnerable spot, as participants weighed whether monetary easing could counter slowdown fears.

Leverage and technical weakness amplify the sell-off

Liquidations added fuel to the fire, with US$1.5 billion wiped out between September 22 and 24, marking the biggest such event since December 2024. Assets like Solana, down 6.2 per cent, NEAR, off 8.5 per cent, and memecoins such as Aster, plunging 23 per cent, bore the brunt as long positions unraveled.

Open interest climbed 9.05 per cent in the last 24 hours, hinting at excessive leverage that backfired. In thinner markets for altcoins, these forced sales created a vicious cycle, pushing prices lower and triggering more exits. Technically, the overall crypto market capitalisation slipped below its seven-day simple moving average of US$3.89 trillion and the pivotal US$3.76 trillion mark.

The 14-day relative strength index hit 26.5, indicating oversold territory, though without signs of bullish divergence to suggest a turnaround yet. Algorithmic trading and institutional players likely sped up the sell-off once supports gave way, hitting high-volatility coins hardest.

The bigger picture: Macro links and market fragility

From my personal view, this episode highlights how tightly intertwined crypto has become with macroeconomic forces, a shift that brings both opportunities and pitfalls. A strong US economy, as evidenced by the jobless claims and GDP revisions, should theoretically support risk assets over time, but the immediate reaction underscores a market fixated on short-term Fed cues.

Crypto’s evolution from a niche alternative to a correlated play on tech and growth means it amplifies Nasdaq moves, which works well in bull runs but exposes it during pullbacks. The liquidations reveal ongoing issues with leverage in derivatives, where euphoria builds positions that crumble under pressure, often dragging spot prices down.

Technically, the oversold readings offer a glimmer of hope for a rebound, especially if Bitcoin holds its ground above US$97,000 to US$104,000, aligning with its 200-day and 365-day moving averages. Bitcoin dominance at 58.16 per cent suggests it could lead any recovery, potentially allowing altcoins to catch up if macro fears ease.

What comes next: Data to watch

Looking ahead, the Personal Consumption Expenditures data on Friday could pivot sentiment if it shows cooling inflation, reopening the door for cuts. Upcoming PMI figures and further jobless claims will test whether the labor market’s strength persists or softens, influencing risk appetite.

In crypto, eyes remain on Bitcoin’s US$100,000 threshold and Ethereum’s US$3,400 level, as breaks lower might spark another liquidation spiral. If altcoins manage to break from Bitcoin’s lead, it could signal a maturing market less dependent on the flagship asset.

Overall, the current fragility stems from this confluence of doubts, deleveraging, and chart failures, but history shows such dips often precede bounces when fundamentals align. Investors would do well to stay vigilant on Fed communications and monitor for stabilisation signs, as the path forward depends on balancing economic vigour with policy support.

 

 

Source: https://e27.co/dow-nasdaq-and-crypto-all-slip-as-treasury-yields-climb-on-delayed-cut-bets-20250926/

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