Bitcoin and XRP Prices Slip. Here's What's Dragging Crypto Down.

By Elsa OhlenBitcoin and other cryptocurrencies edged down Wednesday, again mirroring global markets.Bitcoin is down 2.7% to $83,441 over the last 24 hours, according to CoinDesk data. It rose Tuesday so profit-taking could be contributing to Wednesday's drop.Ether, the world's second largest crypto, is down 4.7% to $1,568 while XRP, the coin used to facilitate payments on Ripple's platform, dropped 4.5% to $2.06.The Hang Seng Index is down 1.5% while Japan's Nikkei 225 fell 1%. Europe's benchmark index Stoxx 600 was down 0.9%.Futures tracking the S&P 500 were down 1.3%.Global markets, and Japan currency in particular, may be contributing to the decline of digital assets Wednesday."The yen has strengthened against other currencies because of rising Japanese bond yields... this could discourage the so-called 'yen carry trade,'--a strategy where investors borrow yen at a lower interest rate to invest in high-yield international assets, Arthur Azizov at B2 Ventures, a financial firm, said. "As a result, it may lead to a reduction in global liquidity and affect the crypto market."Bitcoin tends to benefit from a surplus of liquidity and low interest rates as, typically, investors then turn to riskier assets. "A higher yield offered by traditional assets such as bonds could pose a threat to Bitcoin," Azizov adds.Write to Elsa Ohlen at [email protected] content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.