Bitcoin’s efforts to maintain the $100,000 level have been hampered by rising U.S. Treasury yields and a strengthening dollar, leading to a decline in the digital assets’ performance.
Bitcoin’s efforts to maintain the $100,000 level have been hampered by rising U.S. Treasury yields and a strengthening dollar, leading to a decline in the digital assets’ performance. January started on a high note, with stocks and cryptocurrencies benefiting from the “Trump trade,” boosted by expectations of favorable policies under the new administration. However, this recovery reversed as bond yields rose, leading to a sharp decline in risk assets.
The Federal Reserve’s cautious approach to rate cuts has further increased market uncertainty. Despite a third rate cut in December, the central bank indicated a slower pace of easing, which limited the rise typically seen in risky assets following such measures. While lower interest rates could offer some support, broader economic concerns, such as the U.S. deficit and potential tariffs, have sparked fears of a slowdown in global growth.
Bitcoin’s correlation with technology-heavy stock indices, such as the Nasdaq, remains high, currently at 64%. Robert Wallden, head of trading at Abra, highlighted the increased volatility in digital assets, particularly altcoins, but maintained a bullish outlook, saying: “We prefer to use dips to add positions as long as $82,000 is held in Bitcoin. »
Despite recent setbacks, market observers remain optimistic. Cadenas noted that Bitcoin’s current correction is not alarming, recalling that it was valued at $70,000 just two months ago. She added that the Fed’s rate decisions could create price swings of $5,000, but they pale in comparison to the $40,000 increase Bitcoin saw during Trump’s presidency. For now, the cryptocurrency market faces continued volatility as it searches for its next catalyst.
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