Two of the largest cryptocurrencies, Bitcoin and Ethereum, fell sharply today as fears of prolonged inflation weighed on global markets.
Bitcoin and Ethereum Prices Drop Amid Inflation Concerns, Market Volatility
Bitcoin (BTC): After briefly breaking the $100,000 mark earlier this week, it fell 5% to $96,527.
Ethereum (ETH): It fell 8.5% in the last 24 hours to $3,314.
Other Cryptocurrencies: Major tokens like Dogecoin (DOGE) and Avalanche (AVAX) saw losses exceeding 10%.
Macro Fears Trigger Market Pullback
The decline follows macroeconomic signals pointing to persistent inflation and tighter monetary policies.
Stock Market Impact: U.S. stocks also declined, with the NASDAQ and S&P 500 down more than 1% on Tuesday.
Inflation Concerns: Faster-than-expected growth in the U.S. economy, according to ISM data, has fueled concerns about long-term inflation.
Bond Yields Rise: The yield on 10-year Treasury notes rose to their highest level since April, reflecting investors' concerns.
“Both crypto and traditional markets are reacting to the Federal Reserve’s decision to maintain higher interest rates for longer, coupled with inflation fears,” said Min Jung, an analyst at Presto Research.
The Federal Reserve and Market Sentiment
Comments by Federal Reserve Chairman Jerome Powell in December hinted at a determined approach to inflation control, dampening hopes that interest rates would be cut soon.
Analysts expect the Fed to keep its target interest rate between 4.25% and 4.5% at its meeting on Jan. 29, according to the CME FedWatch Tool.
“Jerome Powell’s comments in December, coupled with stronger-than-expected U.S. economic data, have heightened market jitters and led to increased volatility across both crypto and traditional asset classes,” said Rachael Lucas, crypto analyst at BTC Markets.
Trump’s Inauguration Holds Major Importance
President-elect Donald Trump's inauguration on January 20th increases uncertainty in the market.
Analysts suggest that Trump’s crypto-friendly administration could signal a shift in US economic and cryptocurrency policies, with key appointments such as Scott Bessent as Treasury Secretary and Elon Musk as advisor.
*This is not investment advice.
