Cryptocurrency prices fell sharply on Tuesday, erasing some of Monday's gains as concerns over the bond market mounted.
Bitcoin fell 4%, hitting an intraday low of $97,700. Similarly, ETH (SOL) fell more than 5%.
The decline was consistent with a cautious sentiment across other financial markets, particularly in stocks. The Nasdaq 100 fell more than 1% to $19,635, while the S&P 500 fell 0.50%. These indexes, which are dominated by technology companies, tend to be more sensitive to risk sentiment.
Popular technology stocks were also affected. NVIDIA shares fell 5.4%, wiping more than $175 billion off its market value. Tesla shares fell 3%, while Super Micro Computer shares fell 1.5%.
The selling was likely driven by higher U.S. bond yields ahead of key economic reports, including nonfarm payrolls data and Federal Reserve minutes. The 10-year yield rose 1.7% to 4.70%, while the 30-year yield rose to 4.61%.
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Higher bond yields typically signal expectations of a more dovish Fed. At its December meeting, the Fed signaled a lower target for interest rates in 2025 than it had been . Minutes from that meeting, due to be released on Wednesday, Jan. 8, will provide insight into the Fed’s discussions.
Bitcoin and other cryptocurrencies faced a selloff after a Labor Department report showed job openings rose to a six-month high, driven by the services sector.
The report precedes official nonfarm payrolls data, due out on Friday. A stronger-than-expected jobs report could reinforce the Fed’s hawkish stance, as a tight labor market will keep inflation pressures elevated.
Some analysts believe that rising bond yields could cause a collapse in bitcoin, alternatives, and other assets. In a recent note, Mark Zandi, chief economist at Moody’s, warned that rising deficits under the Trump administration could push yields higher. That, in turn, could lead to a shift from riskier assets like cryptocurrencies to money market funds.
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