Bitcoin Falls to $95K as Christmas Rally Ends, Interest Rates Surge
Bitcoin fell from near $100,000 to $95,300, with the crypto market facing pressure as rising interest rates shift from tailwinds to headwinds.
By Tylt Editorial Team
Bitcoin's rally nearly broke $100,000 during the Christmas period but reversed sharply.
Broader crypto market losses deepened, with major tokens down 4%-7%.
Rising long-term interest rates challenge the Fed’s monetary policy stance.
Bitcoin’s climb toward the elusive $100,000 mark saw another dramatic halt this week, underscoring the volatility that has defined its 2024 journey. Over the Christmas holiday, the cryptocurrency edged toward $100,000, buoyed by optimism and low trading volumes. However, by Thursday morning, Asian market activity saw the rally cut short at $99,800. The sharp pullback left Bitcoin trading at $95,300, reflecting a 3.1% drop in just 24 hours.
The decline rippled through the broader cryptocurrency market, with the CoinDesk 20 Index falling by 4.2% over the same period. Major digital assets like Ethereum (ETH), Solana (SOL), Ripple (XRP), Cardano (ADA), and Avalanche (AVAX) posted losses between 4% and 7%.
While Bitcoin remains more than twice its value compared to the start of the year, the recent downturn highlights changing macroeconomic conditions. For much of 2024, declining interest rates provided a favorable environment for risk assets, including cryptocurrencies. However, the tide has turned, with long-term rates now rising steadily.
The U.S. 10-year Treasury yield climbed to 4.63% on Thursday, approaching its highest level for the year. This shift comes in the wake of the Federal Reserve’s 50-basis-point cut to short-term benchmark rates in September. The unusual rise in long-term yields following a Fed rate cut has puzzled market observers. Macro researcher Jim Bianco emphasized that this divergence is nearly unprecedented in modern history.
Bianco explained that the bond market appears to be reacting negatively to the Fed's indications of further rate cuts in 2025. "The bond market will keep selling (higher yields) the more the Fed talks about rate cuts," he noted. "If the Fed doesn’t shift its stance, bond yields will rise until they force change—be it through breaking inflation or economic strain."
This delicate balancing act between monetary policy expectations and market reactions underscores the challenges facing cryptocurrencies. While Bitcoin and its peers have delivered exceptional returns this year, the sustainability of these gains depends on navigating the evolving macroeconomic landscape.
As the year inches toward its conclusion, the crypto market’s response to these pressures will shape its trajectory into 2025. Bitcoin's brief holiday surge, followed by its retreat, encapsulates the uncertainties that lie ahead.
