Bitcoin's march towards the $100,000 mark was short-lived, as the digital currency fell by its largest percentage in more than two weeks on Tuesday, coinciding with a decline in US stock markets, after new economic data sent Treasury yields higher.
Bitcoin is down 5% in the last 24 hours to $96,525, after crossing the $100,000 barrier on Monday for the first time since Dec. 19. Most other cryptocurrencies are also down, with Ethereum down 7.5% and XRP down about 6%.
Performance correlation with stock markets
Bitcoin fell as stocks fell after a two-day rally. This came after a stronger-than-expected report from the Institute for Supply Management (ISM) on the US services sector, which showed its payments price index hit its highest level since early 2023. The ISM announced on Tuesday that its non-manufacturing purchasing managers’ index (PMI) rose to 54.1 in December, up from 52.1 in November, driven by strong demand. Economists had expected the PMI to come in at 53.5.
An index reading above 50 indicates growth in the services sector, which accounts for more than two-thirds of the U.S. economy. The ISM sees readings above 49 over a period of time as generally indicating expansion in the economy as a whole.
Other data also showed a bigger-than-expected increase in U.S. job openings. The Labor Department reported Tuesday that the number of job openings rose to 8.1 million in November, up from 7.8 million in October. While that’s down from 8.9 million a year ago and a peak of 12.2 million in March 2022, when the economy was recovering strongly from COVID-19 pandemic shutdowns, job openings are still above pre-pandemic levels.
Economists had expected a slight decline in job creation in November.
Treasuries fell across the board, with the yield on the 10-year note rising to its highest level since May after a $39 billion auction set its highest yield since 2007.
The impact of data on cryptocurrencies
“The ISM report led to a sell-off in stocks, which spilled over into cryptocurrencies due to the increasing correlation between digital assets and the Nasdaq,” said Bob Walden, head of trading at digital asset firm Abra.
He added that the decline came with profit-taking and the activation of stop-loss orders on new buy positions above the $100,000 barrier.
Walden noted that renewed reports of President-elect Donald Trump’s shifting stance on tariff negotiations added another layer of volatility to the market, while bond market moves also added to the caution surrounding Bitcoin.
Money flows into bitcoin funds
The drop came a day after a net $987 million inflow into bitcoin ETFs, the largest daily inflow since November, according to data compiled by Bloomberg. That followed inflows of $908 million in the previous session.
Bitcoin’s record run came to a halt in late December as investors sought to lock in profits. Optimism about a crypto-friendly White House led by Trump helped propel the coin to an all-time high of $108,315 in December.
Bitcoin’s prospects in 2025 depend in part on how well Trump delivers on his cryptocurrency promises, which include creating a national reserve of bitcoin. However, some are skeptical that the rally will continue. In a Jan. 6 MLIV Pulse poll asking which investments are winners in 2024 that could be losers in 2025, 39% of respondents chose bitcoin, giving it the largest share of the vote.
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