On January 7, 2025, cryptocurrency prices plummeted, erasing the gains seen the day before. Bitcoin (BTC) fell by 4%, reaching an intraday low of $97,700. Ethereum (ETH), Ripple (XRP), and Solana (SOL) also lost more than 5% of their value.
This decline coincided with a strengthening of negative sentiment in financial markets, especially in the stock sector. The Nasdaq 100 index fell by more than 1%, reaching $19,635, while the S&P 500 dropped by 0.5%. Tech companies such as NVIDIA lost 5.4% of their value, indicating the heightened sensitivity of this sector to changes in investor sentiment.
The main reason for the decline in cryptocurrency prices was the growing concerns regarding the bond market. The yield on 10-year U.S. Treasury bonds rose to 5.1%, the highest level since 2007. This increase reflects investors' expectations of a tighter monetary policy from the U.S. Federal Reserve (Fed).
Market participants are worried about the possibility of further interest rate hikes by the Fed, which could negatively impact the value of risk assets, including cryptocurrencies. Additionally, the rise in bond yields makes traditional financial instruments more attractive to investors, which may lead to a capital outflow from the cryptocurrency market.
In conditions of increased volatility and uncertainty in financial markets, investors are advised to exercise caution and carefully assess risks when making investment decisions.