Cryptocurrency prices experienced a sharp decline on Tuesday, erasing much of Monday’s gains as concerns over the bond market intensified.
Market-Wide Pullback
- Bitcoin (BTC) dropped 4%, hitting an intraday low of $97,700.
- Ethereum (ETH), XRP, and Solana (SOL) fell more than 5%.
The downturn mirrored broader market risk aversion, particularly in equities. The Nasdaq 100 slid over 1% to 19,635, while the S&P 500 lost 0.50%. Tech stocks, often sensitive to risk sentiment, were heavily impacted:
- Nvidia’s shares plunged 5.4%, wiping $175B off its market cap.
- Tesla fell 3%, and Super Micro Computer declined 1.5%.
Rising Bond Yields Add Pressure
The sell-off was partly triggered by climbing U.S. Treasury yields ahead of key economic data releases, including:
- Nonfarm payrolls report
- Federal Reserve meeting minutes
Key yield movements:
| Maturity | Yield | Change |
|--------------|--------|--------|
| 10-Year | 4.70% | +1.7% |
| 30-Year | 4.61% | ↑ |
| 5-Year | 4.50% | ↑ |
Higher yields typically signal expectations of a more hawkish Fed stance. The central bank’s December meeting hinted at only two rate cuts in 2025, fewer than previously anticipated.
Labor Market Data Fuels Concerns
The U.S. Labor Department reported a surge in job openings—a six-month high—driven by service-sector demand. This precedes Friday’s official jobs report; stronger-than-expected data could reinforce Fed tightening, keeping inflation elevated.
Analyst Warnings
Some economists argue soaring yields may trigger a broader asset crash:
- Moody’s chief economist Mark Zandi warned that rising deficits under a potential Trump administration could push yields higher.
- This might shift capital from risk assets (like crypto) into money market funds.
FAQs
Q: Will crypto prices recover soon?
A: Short-term volatility is likely until bond yields stabilize and Fed policy becomes clearer.
Q: How does the Fed influence crypto markets?
A: Rate hikes strengthen the dollar, making risk assets less attractive; rate cuts often boost crypto.
Q: Should I sell my altcoins now?
A: Diversification and long-term strategy are key—avoid reactionary moves to temporary dips.