Bitcoin’s efforts to maintain the $100,000 level have been hampered by rising U.S. Treasury yields and a strengthening dollar, leading to a decline in digital asset performance
Bitcoin’s efforts to maintain the $100,000 level have been hampered by rising U.S. Treasury yields and a strengthening dollar, leading to a decline in digital asset performance. January started on a high note, with equities and cryptocurrencies benefiting from the “Trump trade,” driven by expectations of favorable policies under the incoming administration. However, this rally reversed as bond yields surged, leading to a sharp pullback in risk assets.
The Federal Reserve’s cautious approach to rate cuts further increased market uncertainty. Despite a third rate cut in December, the central bank indicated a slower pace of easing, which limited the boost typically seen in risk assets following such measures. While falling rates might offer some support, broader economic concerns, such as the U.S. deficit and potential tariffs, have raised fears of slower global growth.
Bitcoin’s correlation with tech-heavy stock indexes, like the Nasdaq, remains significant, currently at 64%. Robert Wallden, head of trading at Abra, highlighted increased volatility across digital assets, especially altcoins, but maintained a bullish outlook, stating, “We prefer to use dips to add to positions as long as $82,000 holds in Bitcoin.”
Despite recent setbacks, market observers remain hopeful. Cadenas remarked that Bitcoin’s current correction is not alarming, recalling that it was priced at $70,000 just two months ago. She added that the Fed’s rate decisions might create $5,000 price swings, but they pale in comparison to the $40,000 boost Bitcoin saw during Trump’s presidency. For now, the cryptocurrency market faces ongoing volatility as it seeks its next catalyst.
This article contains links to third-party websites or other content for information purposes only (“Third-Party Sites”). The Third-Party Sites are not under the control of CoinMarketCap, and CoinMarketCap is not responsible for the content of any Third-Party Site, including without limitation any link contained in a Third-Party Site, or any changes or updates to a Third-Party Site. CoinMarketCap is providing these links to you only as a convenience, and the inclusion of any link does not imply endorsement, approval or recommendation by CoinMarketCap of the site or any association with its operators.
This article is intended to be used and must be used for informational purposes only. It is important to do your own research and analysis before making any material decisions related to any of the products or services described. This article is not intended as, and shall not be construed as, financial advice.
The views and opinions expressed in this article are the author’s [company’s] own and do not necessarily reflect those of CoinMarketCap.
