Bitcoin and Ethereum- Bitcoin, Ether and Stocks Hit by Treasury Yields
Bitcoin and Ethereum– Bitcoin slumped on Tuesday, losing 5% of its value, trading at $96,525.50, as a spike in U.S. Treasury yields exerted downward pressure on risk assets. Ethereum also saw a significant drop of 8%, and the broader cryptocurrency market, as represented by the CoinDesk 20 index, fell by 7%.
Impact of Rising Treasury Yields on Crypto Markets
The decline in Bitcoin and other cryptocurrencies followed a sharp rise in the 10-year U.S. Treasury yield. This surge was triggered by data from the Institute for Supply Management, which showed stronger-than-expected growth in the U.S. services sector in December. This growth raised concerns about persistent inflation, which typically pressures growth-oriented risk assets like cryptocurrencies. Higher Treasury yields tend to make riskier investments, such as Bitcoin and stocks, less attractive.
Crypto Stocks Underperform Amid Market Decline
Along with the drop in Bitcoin’s price, stocks of major crypto-related companies also experienced significant declines. Coinbase and MicroStrategy saw drops of more than 8% and 9%, respectively. Bitcoin miners, including Mara Holdings and Core Scientific, were not spared, with their stocks falling by around 7% and 6%, respectively.
Bitcoin’s Performance in 2024 and Uncertainty Around Federal Reserve Rates
Bitcoin had reached over $102,000 on Monday and was expected to potentially double this year. While investors remain optimistic about the future of digital assets and the possibility of clearer regulatory support for cryptocurrencies, uncertainties about the Federal Reserve’s interest rate policy pose challenges. In December, the Fed signaled that while it would cut rates for a third time, the pace of rate cuts in 2025 could be slower than anticipated. Historically, interest rate cuts have had a positive impact on Bitcoin, while rate hikes have caused price declines.
Despite the recent pullback, Bitcoin has gained over 3% since the beginning of 2025, with an impressive 120% gain in 2024.
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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