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Cryptocurrency prices retreated sharply on Tuesday, erasing some of the gains made on Monday as concerns about the bond market intensified.

Bitcoin (BTC) dropped by 4%, reaching an intraday low of $97,700. Similarly, Ethereum (ETH), Ripple (XRP), and Solana (SOL) fell by over 5%.

The decline aligned with a risk-off sentiment that extended across other financial markets, particularly in equities. The Nasdaq 100 index dropped by more than 1% to $19,635, while the S&P 500 fell by 0.50%. These indices, heavily dominated by technology companies, tend to be more sensitive to risk sentiment.

Popular tech stocks were also affected. NVIDIA shares plunged by 5.4%, wiping out over $175 billion in market value. Tesla shares dropped by 3%, while Super Micro Computer declined by 1.5%.

The sell-off was likely driven by rising U.S. bond yields ahead of key economic reports, including the nonfarm payrolls data and Federal Reserve minutes. The 10-year bond yield rose by 1.7% to 4.70%, while the 30-year and 5-year yields climbed to 4.61% and 4.50%, respectively.

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Rising bond yields typically signal expectations of a more hawkish stance from the Federal Reserve. At its December meeting, the Fed hinted at two interest rate cuts in 2025, fewer than previously anticipated. The minutes from that meeting, due on Wednesday, Jan. 8, will provide further insight into the Fed’s discussions.

Bitcoin and other cryptocurrencies faced additional pressure after a Labor Department report showed job vacancies surged to a six-month high, driven by the services sector.

The report precedes the official nonfarm payrolls data, set to be released on Friday. A stronger-than-expected jobs report could reinforce the Fed’s hawkish approach, as a tightening labor market would keep inflationary pressures elevated.

Some analysts believe that the soaring bond yields could crash Bitcoin, altcoins, and other assets. In a recent note, Mark Zandi, Chief Economist at Moody’s, warned that the rising deficits under Donald Trump could push yields higher. That, in turn, would lead to a rotation from risky assets like crypto to money market funds. 

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