Bitcoin drops below $97,000 as Treasury yields pressure risk assets

Bitcoin slumped on Tuesday as a spike in Treasury yields generally weighed on risk assets.

The price of the flagship cryptocurrency was last lower by 5% at $96,529.13, according to Coin Metrics. The largest cryptocurrency market, as measured by the CoinDesk 20 the index fell more than 6%.

Crypto stocks Coinbase and Microstrategy fell more than 7% and 10%, respectively. Bitcoin miners Mara Holdings and Scientific Core they were down about 5% each.

The movements followed a sudden increase in the 10-year US Treasury yield according to data published by the Institute for Supply Management reflecting faster growth than expected in the US services sector in December, adding to concerns about stickier inflation. Rising yields tend to pressure growth-oriented risk assets.

Bitcoin traded above $102,000 on Monday and is widely expected to double this year from that level. Investors are hopeful that clearer regulation will support digital asset prices and, in turn, benefit stocks like Coinbase and Robinhood.

However, uncertainty about the path of Federal Reserve interest rate cuts could put bumps in the road for crypto prices. In December, the central bank signaled that although it cut rates for the third time, it could make fewer rate cuts in 2025 than investors had anticipated. Historically, tax cuts have had a positive effect on the price of bitcoin, while increases have had a negative impact.

Bitcoin is up more than 3% since the beginning of the year. It posted a 120% gain for 2024.