Cryptocurrencies took a sharp hit on Tuesday, erasing gains from earlier in the week. Bitcoin (BTC) fell 4%, dropping to an intraday low of $97,700, while Ethereum (ETH), Ripple (XRP), and Solana (SOL) slid more than 5%.
This sell-off wasn’t limited to crypto. It followed a broader market retreat as investors grew increasingly uneasy about rising bond yields. The tech-heavy Nasdaq 100 dropped over 1% to 19,635, while the S&P 500 fell 0.50%. Big-name tech stocks were hit hard too—NVIDIA lost 5.4% of its value, wiping out $175 billion in market cap, Tesla fell 3%, and Super Micro Computer dipped 1.5%.
What’s driving the fear? Rising U.S. Treasury yields are setting the tone. The 10-year yield jumped to 4.70%, with the 30-year and 5-year yields climbing as well. Higher yields often signal expectations of tighter Federal Reserve policy, which makes riskier assets like cryptocurrencies less attractive.
Adding to the pressure, a Labor Department report showed job openings surged to their highest level in six months, driven by the services sector. This strong labor market could give the Fed more reason to keep interest rates higher for longer, potentially keeping inflation elevated.
Investors are also bracing for key data this week. The minutes from the Fed’s December meeting, expected Wednesday, could provide more insight into its thinking. Meanwhile, Friday’s jobs report will be closely watched to see if the labor market remains tight.
Some experts are warning that higher bond yields could lead to more pain for crypto. Mark Zandi, Chief Economist at Moody’s, cautioned that rising government deficits could push yields even higher, encouraging investors to move money out of risky assets like Bitcoin and into safer ones like money market funds.
For now, the crypto market is feeling the heat from a combination of economic uncertainty and investor caution.
