Bitcoin, Ethereum, XRP Dive. Why Interest Rates Could Be a Problem for Cryptos.

The market value of all cryptocurrencies is around $4 trillion. (Photo by JUSTIN TALLIS/AFP via Getty Images)

Bitcoin and other cryptocurrencies were falling on Friday. The sector could be losing some confidence around future interest-rate cuts.

The price of Bitcoin was down 2.5% over the past 24 hours early Friday, at around $110,090.

The world’s largest cryptocurrency hit a new high of more than $124,000 earlier this month amid optimism over interest-rate cuts. Lower rates make risky assets such as stocks and digital assets more attractive relative to interest-bearing investments such as bonds. Reduced rates also tend to weaken the dollar, which boosts crypto valuations.

Bitcoin has dropped back since then as markets assess President Donald Trump’s efforts to pressure the Federal Reserve to pursue his favored policy of lower rates. Fed Gov. Lisa Cook has sued to block Trump’s recent move to dismiss her.

“Markets are seemingly staying away from pricing in any substantial dovish shifts at the FOMC [Federal Open Market Committee] beyond what can be derived from data,” wrote ING analyst Francesco Pesole in a research note.

Federal Reserve Gov. Christopher Waller said Thursday he would back a 25 basis-points interest-rate cut in September, as widely expected by markets, but added a bigger 50 basis-points cut wasn’t necessary based on current data.

Those doubts appeared to be outweighing comments from Eric Trump—President Donald Trump’s son—indicating that he expects Bitcoin to grow nearly tenfold from its current valuation.

“There’s no question. Bitcoin hits a million dollars,” Eric Trump said in an appearance at the Bitcoin Asia conference in Hong Kong on Friday.

The Trump administration has given hope to the sector with crypto-friendly legislation.

Large altcoins were falling. Ethereum was down 5.4%, XRP dropped 4.5% and Solana was down 2.6%. Dogecoin , which is a memecoin, was losing 4.1%.

Write to Adam Clark at adam.clark@barrons.com