The price of Bitcoin declined sharply Monday, reaching its lowest point in two months as investors recalibrated expectations around Federal Reserve monetary policy.
Key Bitcoin Price Movements
- Current Low: $89,800 (first dip below $90,000 since mid-November).
- All-Time High: $108,000 (recorded nearly a month ago).
- Recent Performance: Traded above $100,000 last week before the current downturn.
Macroeconomic Drivers
David Duong, Coinbase’s Head of Institutional Research, emphasized macroeconomic factors as primary influencers of Bitcoin’s volatility:
"Concerns over delayed Fed rate cuts in 2025—fueled by strong employment data—are pressuring risk assets. A resilient economy could mitigate prolonged declines."
Labor Market Impact
- December Jobs Report: 256,000 jobs added (vs. 160,000 expected).
- FedWatch Tool: 30% probability of unchanged rates through December (up from 16% last week).
Inflation and Policy Outlook
- Upcoming CPI Release: Expected to show 2.7% annual inflation.
- Core PCE Data: Due post-Fed meeting later this month.
- 10-Year Treasury Yield: Rose to 4.799%, reflecting investor caution.
Fed’s Stance
- Projected Rate Cuts: Reduced from four to two in 2025.
- Focus Areas: Immigration/trade policy shifts under Trump’s administration and potential inflationary effects.
FAQs
Why did Bitcoin fall below $90,000?
Market reactions to strong U.S. labor data reduced bets on imminent Fed rate cuts, dampening demand for risk-sensitive assets like Bitcoin.
Could Bitcoin recover soon?
Analysts remain cautiously optimistic for Q1 2025, though volatility is expected amid macroeconomic uncertainty.
How do Fed rates affect crypto?
Lower rates typically boost risk assets by reducing borrowing costs. Delayed cuts may sustain short-term pressure.
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👉 Bitcoin’s long-term outlook remains tied to institutional adoption and regulatory clarity.
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