Bitcoin fell below $93,000 on Wednesday before recovering slightly to $94,600, marking a 2.2% decrease in 24 hours. The main cause is concerns about inflation, as recent macroeconomic data has significantly impacted investor sentiment.



Strong Link Between Crypto and Traditional Assets



According to Jake Ostrovskis from Wintermute, crypto prices are currently closely following the movements of traditional assets after the December meeting, when the US Federal Reserve (Fed) signaled that it would be more cautious in easing financial conditions in 2025.



The latest economic data, such as the US Services Purchasing Managers' Index (PMI) released on Tuesday, exceeded expectations, further reinforcing concerns that inflation may return.



Pressure from Bond Yield Rates and Inflation



Cosmo Jiang from Pantera Capital remarked that the November economic report with unexpected job growth shows that the US economy remains strong. This has led markets, from stocks to crypto, to begin predicting a scenario of 'higher rates for a longer time.'



The yield on 10-year Treasury bonds rose to 4.681% on Wednesday, the highest in eight months. This puts significant pressure on risk assets like Bitcoin, as high yields make investing in bonds more attractive.



Bitcoin Affected by Policy and Inflation Concerns



Bitcoin had reached $100,000 on Monday due to expectations of tax-cut economic policies from President-elect Donald Trump. However, if excessive economic stimulus policies are implemented, the risk of rising inflation could lead the Fed to maintain high interest rates for a longer time.



The USD Index (DXY) has risen close to a two-year high, indicating the strength of the dollar amid concerns about returning inflation.



Short-Term Outlook



US labor market data expected to be released on Friday will be an important factor in assessing economic health and its impact on the Fed's interest rate policy. It is predicted that the unemployment rate will rise slightly to 4.2% in December.



Conclusion



Uncertainty from economic policies and inflation concerns has strongly impacted the crypto market, causing Bitcoin and altcoins like Ethereum and Cardano to drop by 3.4% and 4.6%, respectively. Investors need to closely monitor economic indicators and fiscal policies to guide their investment strategy in this volatile market.