Dropped to $96K, as Interest Rate Concerns Kill Recent Rebound By Investing.com

Investing.com — Bitcoin fell on Wednesday, extending overnight losses and erasing a recent rebound as growing concerns about slower interest rate cuts in 2025 led to heavy losses across risk-driven assets.

The world’s largest cryptocurrency briefly rose above $100,000, marking an extended rebound from a late December rout. But losses on Tuesday and Wednesday saw the cryptocurrency completely erase its recovery, taking it back to its late December lows.

It fell 0.3% to $96,607.7 by 00:49 ET (05:49 GMT), after losing more than 5% on Tuesday.

Cryptocurrencies have also experienced some profit-taking after posting a stellar performance in 2024. The bulk of Bitcoin’s gains came after Donald Trump won the presidential election, since he promised to enact cryptocurrency-friendly policies.

But cryptocurrency markets are now waiting for more signals about Trump’s political plans, as he takes office on January 20.

Price fluctuations hurt Bitcoin

The losses in Bitcoin came alongside risk-driven broader markets, as stronger-than-expected US economic data fueled fears that the Federal Reserve will cut interest rates at a slower pace in 2025.

November’s data was higher than expected, coming a few days earlier than December’s data, which is expected to provide more definitive signals in the labor market.

The stronger-than-expected data for December, while presenting a brighter picture for the US economy, also raised concerns that inflation will remain flat in the coming months, giving the Fed more momentum to slowly lower interest rates.

The central bank lowered its forecast for interest rate cuts in 2025 during its December meeting, citing concerns about persistent inflation and confidence in the labor market.

Fed officials repeated that message earlier this week.

Higher interest rates in the long term do not bode well for speculative assets such as cryptocurrencies, since they limit the amount of liquidity that can be deployed in this sector. This trend has hit the cryptocurrency markets throughout 2022 and most of 2023.

Crypto Price Today: Altcoins Track Bitcoin Losses

Broader cryptocurrency prices fell, tracking Bitcoin, also wiping out the recovery seen over the past week. The losses in several major altcoins were much more pronounced than those seen in Bitcoin.

The world’s No. 2 cryptocurrency fell 8.4% to $3,360.35, while the world’s No. 3 cryptocurrency fell 5.1% to $2.3084.

Ethereum is likely to overtake Bitcoin this year, as friendlier US regulations will see investors diversify beyond the world’s largest cryptocurrency, Compass Point Research analysts said.

And, it decreased between 8% to 12%, while among tokens it decreased by 11%.