Cryptocurrency prices fell sharply on Tuesday, erasing some of Monday's gains as concerns over the bond market mounted.
Bitcoin (BTC) fell 4%, hitting an intraday low of $97,700. Similarly, Ethereum (ETH), Ripple (XRP), and Solana (SOL) fell more than 5%.
The decline was consistent with a cautious sentiment across other financial markets, particularly in stocks. The Nasdaq 100 fell more than 1% to $19,635, while the S&P 500 fell 0.50%. These indexes, which are dominated by technology companies, tend to be more sensitive to risk sentiment.
Popular technology stocks were also affected. NVIDIA shares fell 5.4%, wiping more than $175 billion off its market value. Tesla shares fell 3%, while Super Micro Computer shares fell 1.5%.
The selling is likely driven by higher U.S. bond yields ahead of key economic reports, including nonfarm payrolls data and Federal Reserve minutes. The 10-year Treasury yield rose 1.7% to 4.70%, while the 30-year and 5-year yields rose to 4.61% and 4.50%, respectively.
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Higher bond yields typically signal expectations of a more hawkish stance from the Federal Reserve. At its December meeting, the Fed signaled two rate cuts in 2025, fewer than previously expected. Minutes from that meeting, due to be released on Wednesday, Jan. 8, will provide more insight into the Fed’s discussions.
Bitcoin and other cryptocurrencies faced additional pressure after a Labor Department report showed job openings rose to a six-month high, driven by the services sector.
The report precedes official nonfarm payrolls data, due out on Friday. A stronger-than-expected jobs report could reinforce the Fed’s hawkish stance, as a tight labor market will keep inflation pressures elevated.
Some analysts believe that rising bond yields could cause a collapse in bitcoin, alternatives, and other assets. In a recent note, Mark Zandi, chief economist at Moody’s, warned that rising deficits under the Trump administration could push yields higher. That, in turn, could lead to a shift from riskier assets like cryptocurrencies to money market funds.
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