Bitcoin prices have fallen by around 10% in recent days.
Bitcoin prices have been falling this week, falling below $93,000 earlier in the day after strong economic data sparked concerns that Federal Reserve officials might cut rates more slowly.
The world’s most valuable digital currency by total market capitalization fell to $92,500 this afternoon, according to Coinbase data from TradingView. At this point, it had fallen about 10% after hitting $102,700 on Monday, January 6.
“The recent drop in Bitcoin prices can be attributed to several factors based on recent economic data,” Marc P. Bernegger, co-founder of the crypto fund of funds. AltAlpha Numericsaid via email.
“The strong US jobs data and recently released PMI figures have led to a reassessment of expectations for interest rate cuts by the Federal Reserve for 2025,” he continued.
“This adjustment in market expectations has contributed to a rise in U.S. Treasury yields, which are often inversely correlated with risk assets like Bitcoin, leading to a sell-off in cryptocurrencies,” Bernegger added.
“Positive economic data suggests a more conservative approach to monetary policy, thereby reducing the appeal of speculative assets like Bitcoin,” the analyst concluded.
Brett Sifling, wealth manager for Gerber Kawasaki Wealth and Investment Managementproposed a similar take.
“Recent data released this week suggests continued economic strength in the United States, which has pushed bond yields higher and caused the stock market to decline slightly,” he said in emailed comments.
“As yields increase, investors are less willing to invest in risky assets like bitcoin. Combined with Bitcoin’s correlation with US tech stocks, I believe this is the main reason the crypto has declined this week,” Sifling said.
Jacob Joseph, senior research analyst for CCDataalso weighed in, stating via email that “2025 is off to a slow start for the crypto industry. Bitcoin has continued to decline since the start of the week, mirroring movements in the US stock market.
“Stock indexes hit weekly lows, driven by positive jobs reports that could influence the Federal Reserve’s stance toward easing interest rate cuts ahead of the FOMC minutes. This, coupled with rising Treasury yields, has contributed to the decline in risk assets, including Bitcoin,” he said.
“Investors are generally exercising caution ahead of the release of important data, such as the FOMC minutes and the upcoming nonfarm payrolls and unemployment rate reports on Friday,” the analyst added, highlighting future developments that market observers will likely be watching.
Sifling also gave his views on key issues for traders to follow, noting that “Friday’s jobs report and next week’s inflation data will be key factors to watch ahead of the next meeting of the Fed later this month.
“At this point, there is little to no hope of a rate cut for the Fed’s fourth consecutive meeting, but market participants will wait for Powell to set expectations for the next March meeting and the year to come,” he said.
“If inflation stays under control and we get more rate cuts this year, Bitcoin’s all-time high will be on the lookout for a possible continued breakout,” Sifling noted.
Disclosure: I own Bitcoin, Bitcoin Cash, Litecoin, Ether, EOS, and SOL.
