Bitcoin drops below $90,000 as Fed Rate cuts remain in doubt

price Bitcoin Markets fell to 5-week lows on Monday as they adjusted to the prospect of tighter monetary policy from the Federal Reserve.

The Bitcoin price fell like $89,800 On Monday, it fell below $90,000 for the first time since mid-November. And it’s been almost a month since Bitcoin was installed reached 108,000 dollarseven if the asset is sold by hand Above $100,000 last week.

As market players continue to speculate about changes in crypto regulation ahead of President-elect Donald Trump’s inauguration on January 20, macro factors have fueled Bitcoin’s performance, Coinbase head of institutional research David Duong said. Deciphering.

“Given the recent employment data, concerns that the Fed may not provide any cuts in 2025 are weighing on total assets,” he said. “Even if this decision is the result of a strong economy, we don’t think it will last long.”

Duong added that his team is “still cautiously optimistic” about Bitcoin’s performance in the first fiscal quarter, but he recognizes that “the road is unlikely to be smooth.”

The president-elect has pitched himself as the “crypto president” and promised that under his leadership, regulators would be better for the industry. He promised to create more Strategic Bitcoin Stock this may influence other governments’ acceptance of Bitcoin.

Still, financial market participants are beginning to doubt that the Fed will cut rates in the coming months as labor market indicators paint a picture of a strong US economy. On Wednesday, the Bureau of Labor Statistics will release the first inflation picture of the year.

Markets fell on Friday when the BLS said US employers added 256,000 jobs in December Economists had expected 160,000 new jobs. Trade economy.

“Given the buoyant labor market, we now think the Fed’s tapering cycle is over,” BofA senior global research economist Aditya Bhave said after Friday’s report. Opening bell every day.

At the time of this writing, traders were betting the Fed would keep rates steady at 30%, up from 16% a week ago at its December meeting. CME FedWatch. A month ago, traders predicted only a 9% chance of the US central bank’s easing campaign ending.

Low interest rates support risk assets such as stocks and cryptos. At the same time, they can contribute to inflation by reducing borrowing costs and increasing spending.

The Fed’s preferred inflation gauge, the main PCEwill be released after politicians meet later this month. Meanwhile, economists expect the Consumer Price Index to show inflation was flat at 2.7% in the 12 months to December. Trade economy.

Analysts say rising bond yields are putting pressure on risk assets at a time of macro turmoil. Decryption last week. On Monday, the 10-year Treasury yield continued to climb, rising to its highest level since October 2023 at 4.799%. TradingView.

Last month, the Fed announced it would cut rates slower than expected This year, policymakers are predicting two rate cuts instead of four. Meanwhile, last week’s meeting minutes showed that politicians were paying attention changes in immigration and trade policy Under Trump, they are wary of how they could contribute to inflationary pressures.

Edited by Stacey Elliott.