The crypto market weakened on Monday after China asked domestic banks and financial institutions to cut exposure to US Treasuries, unsettling risk assets and stalling the recent recovery.
Bitcoin slipped back below the $70,000 support level as total crypto market capitalisation fell about 2.75% over 24 hours, while futures tied to US equity indexes also retreated.
The pullback followed reports cited by Bloomberg that Chinese regulators framed the move as risk diversification, amid concerns that heavy US debt holdings could increase volatility exposure.
China’s government has steadily reduced its US Treasury holdings to about $682 billion from more than $1 trillion previously, contributing to higher long-term bond yields and supporting gold’s rally above $5,000.
Rising yields have coincided with renewed pressure on crypto sentiment, with the Crypto Fear and Greed Index sliding deeper into extreme fear territory.
Trading activity has also cooled, with data from CoinMarketCap showing 24-hour crypto volume falling 12% to about $100 billion.
Futures open interest has dropped to roughly $96 billion from last year’s peak above $255 billion, signalling ongoing deleveraging that analysts say often precedes further downside in crypto prices.
At the time of reporting, Bitcoin price was $70,531.94.