Bitcoin fell below $98,000, down 4.8%, influenced by rising Treasury yields and declining crypto stocks. The market’s downturn was triggered by unexpected growth in the U.S. services sector, raising inflation concerns. Despite recent growth, uncertainty regarding Federal Reserve interest rates may hinder Bitcoin’s future performance.

On Tuesday, Bitcoin experienced a significant decline, dropping 4.8% to $97,183.80, as soaring Treasury yields exerted negative pressure on risk assets across the board. This downturn was reflected in the broader cryptocurrency market, which fell over 5% as indicated by the CoinDesk 20 index. Major crypto-related stocks such as Coinbase and MicroStrategy also faced declines of more than 7% and 9%, respectively. Concurrently, Bitcoin mining companies Mara Holdings and Core Scientific saw their share prices decrease by approximately 5% each.

The price drop followed a jump in the 10-year U.S. Treasury yield prompted by a report from the Institute for Supply Management indicating stronger than anticipated growth in the U.S. services sector during December. This development heightened concerns about persistent inflation, which typically pressures growth-oriented risk assets. Bitcoin had previously traded above $102,000 on Monday, with investors generally optimistic about the potential for substantial price appreciation throughout the year amid expectations of improved regulatory clarity for digital assets.

However, uncertainty regarding future Federal Reserve interest rate changes poses challenges for cryptocurrency valuations. The Federal Reserve recently indicated that, despite a third consecutive rate cut in December, it may reduce rates less aggressively in 2025 than many investors had expected. Historically, such rate cuts have supported Bitcoin’s price, while interest rate hikes have negatively impacted it. Since the beginning of the year, Bitcoin has rallied over 3% and has marked a remarkable 120% increase for 2024 thus far.

Bitcoin, the leading cryptocurrency, has garnered significant attention from investors due to its volatility and potential for high returns. In recent months, fluctuations in U.S. Treasury yields have directly impacted the cryptocurrency market, as rising yields tend to make riskier assets less attractive. The interplay between central bank monetary policy, particularly interest rate adjustments, and the performance of cryptocurrencies is a critical factor for market participants, particularly as digital asset regulations are evolving. The overall health of the broader financial and economic landscape also plays a significant role in Bitcoin’s performance.

In summary, Bitcoin’s recent dip below $98,000 can be attributed to rising Treasury yields, which have resulted in broader market declines for cryptocurrencies and related stocks. While there is optimism regarding Bitcoin’s growth potential and the overall regulatory landscape for digital assets, uncertainties surrounding Federal Reserve interest rate policies could hinder future price increases. Investors will need to navigate these challenges to capitalize on the cryptocurrency’s potential upside in 2024.

Original Source: www.nbcphiladelphia.com

Related posts:

Bitcoin Declines Below $98,000 as Treasury Yields Raise Market Concerns Cryptocurrency Market Overview: Bitcoin Recovery and Future Trends Expert Signals Further Bitcoin Pain Amid Fed Rate Concerns Volatility in Cryptocurrency Markets: The Impact of Federal Reserve Policies and Macroeconomic Indicators