What You Need to Know:
- Bitcoin almost reached the $100,000 mark during the holidays but saw a steep drop on Thursday.
- The broader crypto market experienced more significant losses.
- Rising long-term interest rates could impact market dynamics, with speculation on potential Federal Reserve policy adjustments.
With much of the world celebrating Christmas, Bitcoin (BTC) appeared poised to reclaim the $100,000 level following a brief dip below $93,000 before the holiday. However, the rally halted just above $99,800 as trading opened in Asia on Thursday and swiftly dipped back to around $95,000 just hours later.
As of now, Bitcoin is trading at $95,300, reflecting a decline of 3.1% in the past 24 hours.
The CoinDesk 20 Index also showed an overall reduction of 4.2% during the same period, with notable cryptocurrencies like ETH, SOL, XRP, ADA, and AVAX recording losses between 4% and 7%.
U.S. markets resumed trading on Thursday, indicating modest early declines; gold and oil prices are slightly better off.
Bitcoin's price activity over the last 48 hours has been amidst low trading volumes. Despite recent downturns, Bitcoin has more than doubled in value since the beginning of the year, yet potentially neglected over the past week is the shift from lower to higher interest rates, signaling a transition to challenges ahead.
The 10-year Treasury yield has been on the rise, now standing at 4.63%—only a few basis points shy of its 2024 peak. This yield has surged nearly 100 basis points since the Federal Reserve cut regional short-term rates by 50 basis points in September.
Macro researcher Jim Bianco emphasized that such a swift ascend in long-term rates following a Fed rate cut is nearly without precedent in current monetary principles. "The bond market will continue to sell off (raising yields) the more the Fed discusses rate cuts for 2025," Jim asserted. "If the Fed does not temper its rate-cutting rhetoric, bond yields will rise as much as necessary to combat inflation."
