U.S. Treasury yields soar, hitting risk assets; cryptocurrency market impacted
The surge in U.S. Treasury yields has led to a significant drop in Bitcoin prices by 5%, to $96,525.50, impacting the entire cryptocurrency market. Ethereum fell by 8%, while the stock prices of Coinbase and MicroStrategy dropped by over 8% and 9%, respectively. Concerns over "sticky inflation" have intensified, causing the 10-year Treasury yield to rise, putting pressure on risk assets. Although Bitcoin has risen over 3% since the beginning of the year, the uncertainty regarding future interest rate cuts may affect its price
According to Zhitong Finance APP, on Tuesday, the price of Bitcoin fell sharply due to the surge in U.S. Treasury yields, which put pressure on risk assets overall.
According to Coin Metrics, the price of Bitcoin dropped by 5% to $96,525.50. Ethereum fell by 8%, while the broader cryptocurrency market (measured by the CoinDesk 20 index) declined by 7% overall.
Cryptocurrency-related stocks were similarly impacted. The stock prices of Coinbase and MicroStrategy fell by more than 8% and 9%, respectively, while Bitcoin mining companies Mara Holdings and Core Scientific saw their stock prices drop by approximately 7% and 6%.
The catalyst for this market volatility was the data released by the Institute for Supply Management (ISM), which showed that the growth rate of the U.S. services sector in December exceeded expectations, intensifying concerns about "sticky inflation." The yield on the 10-year U.S. Treasury bond quickly rose, and an increase in yields typically puts pressure on growth-oriented risk assets.
On Monday, the price of Bitcoin had briefly surpassed the $102,000 level. The market generally expects Bitcoin to double from this level this year. Investors hope that a clearer regulatory framework will support digital asset prices, benefiting related stocks such as Coinbase and Robinhood.
However, the uncertainty regarding the Federal Reserve's future interest rate cuts may bring volatility risks to cryptocurrency prices. In December of last year, although the Federal Reserve cut rates for the third consecutive time, it also hinted that the number of rate cuts in 2025 might be fewer than the market expects. Historical data shows that rate cuts usually have a positive impact on Bitcoin prices, while rate hikes have the opposite effect.
Despite this, Bitcoin has risen over 3% since the beginning of this year, and it has recorded a 120% increase for the entire year of 2024