Bitcoin and the broader cryptocurrency market are grappling with a wave of uncertainty as recent U.S. economic data and a volatile bond market raise questions about potential interest rate cuts this year.
While traditional U.S. markets were closed Thursday for the memorial of former President Jimmy Carter, crypto markets continued their 24/7 activity, absorbing the full impact of mounting apprehension ahead of Friday’s December jobs report.
By Thursday afternoon, Bitcoin (BTC) had dropped to around $91,000, marking a 3% decrease over the past 24 hours and returning to levels not seen in over a month. The CoinDesk 20 Index saw similar declines, with assets like Solana (SOL) and Chainlink (LINK) experiencing significant double-digit losses.
This downturn follows a strong rally in the fourth quarter of 2024, sparked by the optimism surrounding Donald Trump’s election win and the expectation of a more favorable regulatory environment for crypto. Additionally, the U.S. Federal Reserve’s interest rate cuts earlier in the year helped to prop up risk assets like Bitcoin. However, new economic data has shown persistent inflation, prompting a rise in long-term bond yields, which has in turn pressured cryptocurrencies.
With yields on U.S. Treasury bonds climbing, the appeal of riskier assets like Bitcoin is beginning to diminish, especially as traders shift expectations away from future rate cuts in 2025. Instead, some are now pricing in the possibility of rate hikes as early as the coming months, which could further dampen enthusiasm for digital assets.
What’s next for Bitcoin?
“Bitcoin, Ethereum, and Solana are testing the lows from December 5, and there’s growing uncertainty about whether these levels will hold,” noted Eugene Ng Ah Sio, a well-known trader, on X. “This is when traders begin to panic.”
Ng Ah Sio indicated that Bitcoin could see further downside to $85,000 if it fails to hold its ground above $90,000.
Venture capital fund Asymmetric’s Joe McCann also suggested that Bitcoin could target the $75,000 level if the $90,000 threshold doesn’t hold.
In addition, traders are closely watching the possibility of market-moving headlines, such as the potential impact of Silk Road-related Bitcoin sales. According to Skew, a prominent trader, the recent price drop could be linked to these sales, but the market’s response has been relatively calm, as buying interest at lower prices appears to outweigh the selling pressure.
“There’s been little volatility behind the price move, which signals that there’s still enough bid liquidity to absorb the current selling,” Skew commented. Despite the drop, this suggests that Bitcoin’s market may be more resilient than it initially appears.
