Interest rates have been a key driver of Bitcoin's growth for most of 2024, but they may now become an obstacle.
While the world was celebrating Christmas, Bitcoin quietly climbed back to the $100,000 range after a sharp drop below $93,000 just before the holiday.
However, this rally stalled at $99,800 as Asian markets opened for trading on Thursday morning, December 26, and quickly reversed, falling to the $95,000 range within a few hours.
At the time of writing, Bitcoin is trading at $96,150, down 3.8% from the day's high of $99,960.
Bitcoin price drops over 3.8% on December 26. Source: TradingView
Other major coins like ETH, SOL, XRP, ADA, and AVAX also saw declines on December 26, losing between 4% and 7%.
Meanwhile, TOTAL3, the index representing the total crypto market capitalization excluding BTC and ETH, dropped by over 4%, equivalent to more than $40 billion, today.
The crypto market shed over $40 billion in market capitalization on December 26. Source: TradingView
The U.S. market has opened but has not seen significant volatility. Stock indices indicate a slight decline, while gold and oil prices have edged up slightly.
Although Bitcoin has more than doubled in value in 2024, recent downturns may signal that low interest rates in the U.S. are becoming an obstacle to the coin's growth.
The yield on the 10-year Treasury note continued to rise early Thursday, reaching 4.63%, just a few basis points away from its 2024 high. Yields have climbed nearly 100 basis points since the Federal Reserve (FED) cut short-term interest rates by 50 basis points in September.
Macro researcher Jim Bianco noted that such a rapid increase in bond yields immediately following a FED rate cut is almost unprecedented in history.
The bond market will likely continue selling off with higher yields as the FED keeps discussing potential rate cuts in 2025.
-- Macro researcher Jim Bianco stated --
Jim Bianco stated that if the FED does not curb its intention to cut interest rates, bond yields could rise to levels that begin to break everything apart, with the goal of tackling inflation.
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