$BTC $ETH $XRP #Sol Reversing some of the gains made the previous day as growing concerns over the bond market put pressure on risk assets. Bitcoin (BTC) saw a 4% drop, hitting an intraday low of $97,700, while other major digital currencies, including Ethereum (ETH), Ripple (XRP), and Solana (SOL), suffered losses of over 5%. This retreat in cryptocurrencies mirrored a broader risk-off sentiment that rippled through traditional financial markets, particularly affecting tech stocks and major equity indices. The Nasdaq 100 fell by more than 1% to $19,635, and the S&P 500 dropped by 0.50%, reflecting the heightened market uncertainty.
The catalyst for this decline appears to be the rise in U.S. bond yields, which triggered a shift in investor sentiment ahead of crucial economic data. The 10-year Treasury yield rose by 1.7%, reaching 4.70%, while the 30-year and 5-year yields also climbed to 4.61% and 4.50%, respectively. This surge in bond yields typically signals expectations of more hawkish Federal Reserve policies, as the central bank is anticipated to take a tighter stance on inflation. The latest job vacancy report from the Labor Department, which indicated a six-month high, further fueled these concerns by suggesting that the labor market remains strong and could drive inflationary pressures higher.
The market's anxiety is compounded by anticipation of the upcoming nonfarm payrolls report and the release of the Federal Reserve's minutes from its December meeting. These documents are expected to provide further insight into the Fed's thinking regarding interest rate policies. While the central bank had previously signaled two interest rate cuts for 2025, expectations have now shifted, with some analysts suggesting that the Fed may maintain a more hawkish position for longer, especially if job growth remains robust. This has created added pressure on cryptocurrencies and other riskier assets, leading to a flight toward safer investments like government bonds and money market funds.
Some market experts are sounding alarms over the potential long-term impact of rising bond yields on the cryptocurrency market. Mark Zandi, Chief Economist at Moody's, warned that the increasing fiscal deficits under former President Trump could push bond yields even higher. This, in turn, could lead to a rotation out of speculative assets like Bitcoin and altcoins, with investors shifting their capital into more stable, income-generating assets. As yields continue to climb, the outlook for digital currencies remains uncertain, with some analysts predicting a continued period of volatility.
