Bitcoin falls below $93,000 due to inflation fluctuations affecting cryptocurrency prices

price Bitcoin It briefly fell below $93,000 earlier Wednesday, according to data from Queen Gekkois facing pressure after a series of macroeconomic data points raised inflation fears among investors.

said Jake Ostrovskis, an OTC trader at Wintermute Decryption Cryptocurrency prices have been closely linked to traditional assets since the Federal Open Market Committee meeting in December, at which policymakers indicated more Cautious approach To ease financial conditions in 2025.

He said that traditional assets were discounting interest rate cuts from the Federal Reserve amid signs that the US economy remains strong, and this had a clear impact on the cryptocurrency market as inflows stimulated a wave of post-election hype.

For example, the Institute for Supply Management released its services sector PMI on Tuesday. The measure used to measure industry-specific economic activity was higher than expected Trading economics.

“Two months ago, no one was looking at this,” Ostrovskis said. “But because the Fed has put… [the] Under the weight of inflation data now, investors and traders are looking at every bit of it.

Meanwhile, data from the US Bureau of Labor Statistics showed that the economy remained on a “very strong footing” in November, Pantera Capital general partner Cosmo Jiang said. Decryption. the a report He added that it showed an unexpected increase in employment opportunities, and “all markets, from stocks to prices to cryptocurrencies, began to price in a ‘higher for longer scenario’.”

The Federal Reserve cut its benchmark interest rate by 1% last year, to cut Interest rates rose in September for the first time in four years. While low interest rates tend to support risk assets, they can also stimulate inflation by increasing spending and making borrowing easier.

After Wednesday’s decline, Bitcoin price has since rebounded to $94,600, showing a 2.2% decline over the past day. At the same time, the price reached… Ethereum and Solana They fell 3.4% to $3,300 and 4.6% to $195, respectively.

10x Research wrote in a note on Wednesday that the “less aggressive rate cut path,” which saw bitcoin pull back from an all-time high of $108,000 in December, was driven in part by concerns surrounding the incoming administration and its ability to overstimulate the economy. economy through new political movements.

On Monday, Bitcoin surpassed $100,000, surpassing the psychological mark for the first time in weeks with President-elect Donald Trump’s team. Its weight is said Paired tariff plan. Talk to Bloomberg Jan Hatzius, chief economist at Goldman Sachs, said Tuesday that inflation will cool faster if Trump does not implement “global tariffs,” as the president-elect promised.

The US Dollar Index (DXY), which measures shifts in the value of the dollar compared to a basket of other currencies, fell on Monday to 108. However, since inflation fears resurfaced, the index is close to its highest level in two years at 113. According to TradingView.

The 10-year Treasury yield, which rose to 4.681% on Wednesday, is close to its highest level in eight months, according to Business Insider. TradingView. Since inflation looks like it will rise again, higher bond yields are already impacting cryptocurrency prices, Wintermute’s Ostrovskis said.

“As yields rise, the incentive to put money into risk assets like cryptocurrencies becomes less, and so cryptocurrencies are sold,” he explained.

With concerns about inflation rising, financial market participants will take a fresh look at the state of the labor market on Friday. The Bureau of Labor Statistics is scheduled to release its monthly employment report, with the unemployment rate expected to rise to 4.2% in December, according to Trading economics.

Modified by Andrew Hayward