Bitcoin, Ethereum and other cryptocurrencies fell across the board on Thursday, cooling a rally that had recently lifted Bitcoin to an eight-month high.

After gaining 9% over the past week and breaking above $87,000 earlier this week to touch an eight-month peak, Bitcoin came under pressure from rising international oil prices and the accompanying strength in long-dated US Treasury yields and the dollar, with oil holding above $100 a barrel transmitting global macro stress into the crypto market.

On Thursday, Bitcoin fell as much as 1.6% intraday to $82,882, while Ether and other major cryptocurrencies also retreated.

This pullback came alongside weakness in equity markets, reflecting investors taking profits on recent gains and adjusting risk exposure as dollar funding conditions tightened.

Still, there remains an optimistic view on whether the rebound can continue: Bitcoin had earlier broken above its 50-week moving average, providing trend traders with a technical signal supporting further gains, and some analysts therefore interpreted this decline as a consolidation within an uptrend.

The next pricing focus is whether macro pressure can ease, and how positions adjust after roughly $15 billion of Bitcoin options expire on Friday.

The direct catalyst for oil's renewed rise was tough rhetoric from both the US and Iran during the UN General Assembly, along with the fact that conditions for normal navigation through the Strait of Hormuz have still not been met.

On September 23, Iranian President Masoud Pezeshkian stressed in New York that Iran would not yield to US pressure but still believed in diplomacy, a statement responding to Trump's military threat the previous day.

Iranian security chief Mohsen Rezaei also said Tehran would not reopen the strait until its conditions are met.

Meanwhile, Iranian Foreign Minister Abbas Araghchi and US envoys Steve Witkoff and Jared Kushner have exchanged messages through Qatari intermediaries to discuss reopening the strait and lifting the US maritime blockade on Iranian ports, but significant differences remain.

This means diplomatic contacts have not yet translated into an executable arrangement for restoring shipping, and the market must still price in uncertainty over Gulf energy supply.

Price moves show the scale of this energy shock: Brent crude settled up 3.86% at $103.08 a barrel on September 23; based on front-month settlement prices across trading days, that is about 42.2% above the $72.48 level on February 27, the last trading day before the war broke out, and about 11.8% above the $92.17 level on August 24.

At 17:40 Beijing time on September 24, Brent rose further to $105.51, up 2.36% on the day.

Although it briefly fell below $100 during the period, the rapid rebound afterward showed that optimistic expectations for supply recovery can still be easily interrupted by negotiating differences.

The Global Asset Pricing Anchor Rises: How the Dollar and the 10-Year Treasury Yield Curve Are Compressing Crypto's Upside

What the market is now trading is already the possibility of further policy tightening after the Fed's rate hike.

The Fed raised rates by 25 basis points on September 16, lifting the federal funds target range to 3.75%–4.00%.

Afterward, stronger-than-expected US purchasing managers' indices, a weak Treasury auction, and Fed Governor Michael Barr's remarks about further rate increases together reinforced tightening expectations.

Based on market pricing in the morning of September 24, the probability of another rate hike in October was close to 70%, up from about 50% a week earlier; the dollar index held near 101.08, around a two-month high.

The core logic is that an energy price shock combined with still-resilient economic demand has led the market to raise its expected future policy rate path and increase the relative return appeal of dollar assets.

The long end of the bond market is also repricing.

In early European trading on September 24, the 10-year US Treasury yield reached 5.145% at one point; the 30-year yield rose as high as 5.444%, the highest since 2004.

From a fixed-income pricing perspective, long-term Treasury yields can be broken down into the expected average level of future short-term rates and a term premium: the former reflects how high and how long the market expects the Fed to keep rates, while the latter compensates investors for bearing long-term inflation and rate uncertainty.

Energy inflation affects the pricing of both components, while government debt supply and other financing needs also influence the allocation of long-term funds.

Therefore, rising long-end yields reflect joint changes in the policy path, growth resilience, and the compensation required to hold long-term bonds.

This change is transmitted to the crypto market mainly through three channels: the opportunity cost of holding assets, financing conditions, and cross-asset risk budgets.

Bitcoin itself generates no interest income, so when tightening expectations raise the return appeal of cash and short-term dollar assets, the expected return investors demand for holding Bitcoin also rises; higher dollar funding costs may reduce the appeal of leveraged strategies.

When stocks and bonds are volatile at the same time, cross-asset investors may also cut overall risk exposure, making crypto assets that had already risen sharply targets for profit-taking.

Research from the Bank for International Settlements has also found that monetary tightening is often accompanied by reduced risk-taking in crypto markets.

Thus, the essential logic behind this pullback in Bitcoin and other risk assets is the transmission of tighter global financial conditions into crypto assets, and their short-term performance remains sensitive to dollar liquidity and funding costs.

Pullback After an Eight-Month High

The momentum that recently drove Bitcoin to an eight-month high has clearly cooled, with the world's largest cryptocurrency falling as much as 1.6% to $82,882 after earlier this week climbing above $87,000.

The second-largest cryptocurrency, Ether, fell to about $2,628.

Smaller cryptocurrencies such as XRP, Solana and Zcash also declined.

Broader market factors weighed on risk assets, prompting some investors to take profits after crypto's recent gains.

Still, some analysts believe the pullback is only temporary and that cryptocurrencies have room for further gains.

FxPro chief market analyst Alex Kuptsikevich said factors such as a stronger dollar, surging bond yields and falling stock prices triggered the profit-taking.

He said: "Despite the pullback, the uptrend is still continuing and has not ended, which suggests this decline may just be a temporary pause along the way up."

During the recent rally, cryptocurrencies shook off a series of potential negatives, including US lawmakers' failure to advance long-awaited crypto market structure legislation.

"The crypto market has performed quite well over the past few weeks," said Rajiv Soni, head of international portfolio management at Wave Digital Assets.

He added that Bitcoin's break above its 50-week moving average last Friday gave traders confirmation that the rally "still has legs."

For Bitcoin investors, profit-taking opportunities had been rare before this; after months of stagnation, Bitcoin gained 9% over the past week.

"Bitcoin fell more because it had risen more," said Ivan Li, trading head at QCP Capital.

"In reality, it is moving in line with other assets."

Investors are now watching global market moves for clues on the next leg.

With futures down 0.6%, the S&P 500 looked set to erase nearly all of this week's gains.

Nasdaq 100 futures fell 1% as chip stocks sold off sharply.

Meanwhile, selling in the long end of the US Treasury market continued, with the 30-year yield rising to its highest since 2004, while the dollar was on track for its longest winning streak since May.

Crypto traders are also watching the quarterly expiration of about $15 billion in Bitcoin options contracts on Deribit, with more than one-third of open interest set to expire on Friday.

The put-to-call ratio, a closely watched gauge measuring the number of options giving the right to sell versus those giving the right to buy, was 0.70, indicating more contracts were betting on price gains.