Key Information:
- Bitcoin surged to just under $110,000 on Wednesday but reversed course quickly.
- The drop was fueled by profit-taking and a selloff in traditional risk assets as interest rates climbed.
Bitcoin’s surge to a fresh all-time high quickly met resistance just below the $110,000 mark, falling nearly 3% back to $106,000. As of the latest update, Bitcoin was trading above $107,000, slightly lower from the previous day.
Other cryptocurrencies faced similar challenges:
- Ether (ETH) and Solana (SOL) also saw declines despite earlier gains this week.
The downward price movement was potentially driven by traders taking profits after a rapid increase, as Bitcoin had risen nearly 50% from its lows about five weeks ago. Compounding this was a poor auction of 20-year U.S. Treasury bonds that affected the market.
Market Reaction
Following the bond auction, the yield on the 30-year Treasury surged to its highest in over two years at 5.07%. This instigated a rapid decline in the Nasdaq and S&P 500 indexes.
Josh Mandell, a market analyst, remarked prior to the bond auction, “This is a ticking time bomb, swept under the rug.” He pointed out the potential consequences of a missed auction in the bond market, stating that if it were not for the Fed’s intervention, a failure to manage bonds could lead to a default.
Kirill Kretov indicated that market liquidity has diminished significantly since late 2024, influencing Bitcoin’s volatility. He pointed out, “Structurally, there’s room for explosive upside, but a sharp correction can happen at any moment.”
Lastly, the $110,000 limit has become crucial within the current market, serving as a battleground between a local high and a breakout point, according to trader Skew.
