Bitcoin Price Falters as Macro Trends and Yield Increases Weigh In
Bitcoin Price– Bitcoin (BTC) showed signs of recovery over the Christmas period, initially breaking above $99,800 after briefly dipping below $93,000 just before the holiday. However, its momentum faltered as Asian markets opened on Thursday morning, causing the price to drop swiftly to around $95,000. Despite this dip, Bitcoin has still more than doubled its value year-to-date, showcasing its long-term strength.
Broader Crypto Market Faces Declines
The broader crypto market followed a similar trend, with the CoinDesk 20 Index falling by 4.2% over the same period. Major altcoins such as Ethereum (ETH), Solana (SOL), Ripple (XRP), Cardano (ADA), and Avalanche (AVAX) experienced losses ranging from 4% to 7%, further reflecting the market’s overall downtrend. As traditional markets opened in the U.S., stock index futures indicated modest early losses, while gold and oil showed slight gains.
Macroeconomic Trends Impacting Crypto Prices
While Bitcoin continues to struggle near the $100,000 level, macroeconomic factors are starting to play a significant role in its short-term price action. Bitcoin’s recent declines, while still maintaining impressive year-to-date gains, may be impacted by broader shifts in interest rates. The 10-year U.S. Treasury yield has been on the rise, now sitting at 4.63%—just below its 2024 high. This marks a nearly 100-basis point increase since the Federal Reserve’s 50-basis point rate cut in September, signaling potential tightening conditions.
The Bond Market’s Reaction to Fed’s Rate-Cutting Talk
According to macro researcher Jim Bianco, the swift rise in long-term interest rates after the Fed’s rate cut is unprecedented in modern monetary policy. He noted that the bond market is reacting to the Fed’s ongoing discussions of future rate cuts. “The bond market will keep selling (higher yields) the more the Fed talks about rate cuts in 2025,” Bianco explained. He further added, “If the Fed does not back off the rate-cutting talk, bond yields will go as high as needed to start breaking things, to break inflation.” This suggests that rising yields could put downward pressure on assets like Bitcoin, which has historically correlated with lower interest rates.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.
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