On Tuesday, a decrease in bond prices led to an increase in Treasury yields, which in turn caused a drop of almost 2% in tech stocks within the Nasdaq Composite. In simpler terms, the fall in bond prices caused Treasury yields to rise, and this rise affected tech stocks in the Nasdaq Composite negatively, causing them to decrease by nearly 2%.
In addition to Bitcoin, Ethereum saw a decrease of almost 8% during the past 24 hours, Ripple experienced a drop of around 6%, and Solana had a steep decline of almost 10%.
Or more informally:
Besides Bitcoin, Ethereum, Ripple, and Solana all took a hit in the last day, with Ethereum falling nearly 8%, Ripple dropping by about 6%, and Solana slumping close to 10%.
BTC Price Retraces Jan 6 Bump on New Congress
Kicking off the work week, Bitcoin’s value saw a surge on Sunday following two days of stability near the $98,000 mark. By Tuesday morning, it had climbed above $102,500.
It’s highly probable that the surge was due to the excitement surrounding the pro-cryptocurrency stance of the incoming Republican members in the blockchain market, as they officially took office during the 119th Congress on Monday, following their gathering in Washington D.C. on January 3.
The CEO of Ripple Labs, Brad Garlinghouse, who is responsible for the development of XRP – the third-largest cryptocurrency (excluding stablecoins) after Bitcoin and Ethereum – has praised the current 119th Congress as “the most supportive of cryptocurrencies in history.
However, by Tuesday, enthusiasm towards the new administration in Washington began to wane rapidly, as a spike in U.S. Treasury bond yields led to a decline across risky assets. Notably, cryptocurrencies, including Bitcoin, were among the growth-oriented high-risk/high-reward investments that experienced a fall on this day.
Bitcoin’s Price Slumps on Treasury Yields
On Wall Street, the Nasdaq Composite experienced a significant decline, dropping over 2.5% before the market closed at 4 pm EST. By the end of the business day, the Nasdaq had shed close to 2%, although it regained some ground during intraday trading.
On Tuesday, the Institute for Supply Management released data showing a quicker expansion in December compared to analysts’ predictions. This unexpectedly robust growth caused apprehension in the market about potential higher inflation in US dollars, leading to a drop in demand for US Treasury bonds.
As a researcher, I’ve observed that when the U.S. dollar depreciates and economic growth is robust, leading to price increases, the return on bonds (both coupon payments and principal repayment) diminishes. In such circumstances, markets tend to sell these bonds at a reduced price, thereby raising bond yields.
As an analyst specializing in the retail and institutional finance sector, I’ve noticed a surge of optimistic forecasts regarding Bitcoin’s price by 2025. So far this month, the general outlook remains overwhelmingly bullish.
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2025-01-08 12:36