Bitcoin (BTC) briefly lost the $90,000 level to hit $88,900 on Jan. 13 after falling nearly 7% amid the macroeconomic uncertainty gripping the markets, according to Bitfinex’s latest Alpha report.
The report noted that the price drop coincides with a reversal in market sentiment. Spot Bitcoin exchange-traded funds (ETFs) experienced net outflows on 7 of the last 12 trading days.
Despite a strong start to the year, marked by nearly $1 billion in inflows on Jan. 3 and Jan. 6, momentum reversed with $718 million in outflows on Jan. 8 and Jan. 10. These developments coincide with macroeconomic pressures, including rising Treasury yields and the Federal Reserve policy.
The US 10-year Treasury yield reached 4.79%, its highest level in 14 months. The surge impacts Bitcoin by increasing the opportunity cost of holding non-yielding assets and drawing institutional investors toward safer, yield-generating options like government bonds.
Regarding the new Fed stance, hawkish minutes from the Federal Open Market Committee (FOMC) and stronger-than-expected US job growth have decreased the likelihood of rate cuts in 2025, tightening financial conditions and curbing liquidity in speculative markets like crypto.
Treasury yields’ dual pressure
Rising Treasury yields exert a dual pressure on Bitcoin. Higher yields attract institutional capital toward bonds while tightening financial conditions reduce overall liquidity.
As a result, institutional investors rebalance portfolios, favoring bonds over volatile, non-yielding assets like Bitcoin. Additionally, higher borrowing costs decrease inflows into speculative markets, amplifying the downward pressure on Bitcoin’s price.
Historically, Bitcoin has reacted more rapidly to such shifts than equities due to its higher volatility and sensitivity to liquidity changes. For example, while equities may take months to reflect higher yields, Bitcoin often reacts within weeks, as seen during previous yield spikes.
Bitcoin’s price trajectory remains tied to US equities, particularly the S&P 500 (SPX). The
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Author: Gino Matos
