Cryptocurrencies faced downward pressure on Monday as U.S. interest rates surged following robust economic data and Federal Reserve Chair Jerome Powell’s reaffirmation of his hawkish stance.
Bitcoin (BTC), the dominant cryptocurrency, retreated to $42,200 late Monday after reaching highs near $43,400 earlier in the day. At the time of writing, it had declined by 1.2% over the past 24 hours.
Most cryptocurrencies experienced similar or greater declines during the day, with the CoinDesk20 index showing a 1.3% decrease, with 18 assets in the gauge recording losses. Notably, Chainlink’s (LINK) native token, which facilitates connections between blockchains and external networks, emerged as the top gainer among CD20 constituents, registering a modest 2% increase.
The dip in crypto prices coincided with a 14-basis-point increase in the 10-year U.S. Treasury bond yield during the day, extending its two-session climb to 30 basis points.
This upward movement was fueled by remarks from U.S. Federal Reserve Chair Jerome Powell during a Sunday night interview on 60 Minutes, where he indicated that the Fed has little intention of cutting rates in March, contrary to market expectations.
Furthermore, Monday brought additional positive economic news, with the ISM Services index unexpectedly rising to 53.4 in January, surpassing December’s 50.5.
Major U.S. stock indexes, including the S&P 500 and the Nasdaq 100, closed with slight declines.
Despite the day’s losses, BTC remained above the $42,000 support level, attracting buyers. However, risk appetite in the crypto markets is subdued, with investors awaiting fresh investment narratives, according to analysts at SwissBlock.
The report noted that exclusive drivers for the crypto market, such as BTC ETFs, have already been factored in, leaving participants on the lookout for the next significant catalyst.
Looking ahead, Markus Thielen, an analyst at 10x Research and head of research at Matrixport, foresees BTC rallying to $70,000 by the end of 2024, reflecting a 65% increase from current levels.
“Supported by the macro environment, monetary tailwinds, the U.S. election cycle, and gradually increasing demand from TradFi investors allocating to bitcoin ETFs, a bitcoin rally to $70,000 appears plausible,” Thielen wrote in a Friday statement.
This information is not legal advice. Do your own research before making any decisions. Only invest what you can afford to lose and seek independent financial advice if needed. Understand the risks involved before purchasing any cryptoassets.