Could Falling Treasury Yields Be Why BTC Price Tumbled On Tuesday?

Rising Treasury yields on the back of falling bond prices on Tuesday sent Nasdaq Composite tech stocks down nearly 2%.

Apart from BTC, Ethereum fell almost 8%, Ripple fell 6% and Solana was down almost 10% in the 24-hour window.

BTC price pulls back on January 6th on the new congress

Entering the work week, the price of Bitcoin gained strength on Sunday after trading flat on Friday and Saturday around $98,000, as it rose to over $102,500 on Tuesday morning.

This was likely the result of the blockchain market’s enthusiasm for the upcoming pro-cryptocurrency Republican Congress. US delegates to the 119th Congress took office on Monday after meeting in Washington, DC on January 3.

Ripple Labs CEO Brad Garlinghouse, who oversees the development of XRP, the third most capitalized non-stablecoin token (behind Bitcoin and Ethereum), recently hailed the 119th as “the most pro-crypto Congress in history.”

But on Tuesday, market euphoria about Washington’s new regime quickly faded as a rise in US Treasury yields pushed down the prices of risk assets across the board. Cryptocurrencies like Bitcoin weren’t the only growth-oriented high-risk-reward assets that fell on Tuesday.

Bitcoin price falls on Treasury yields

The Nasdaq Composite was heavily focused on the technology sector, falling more than 2.5% before Wall Street markets closed at 4pm EST. By the end of the day, the Nasdaq had lost nearly 2% after recovering a bit in intraday trade.

The Institute for Supply Management released new data on Tuesday that indicated faster growth in December than analysts expected. As a result, markets lost their nerve for US Treasuries on fears of higher inflation in the US dollar.

When the dollar weakens and prices rise in a growing economy, bond coupons and their principal investment owed to the note’s owner at maturity lose value. Therefore, the markets sell them at a discount, which causes bond yields to rise.

A number of retail and institutional finance analysts have released some interesting predictions for the price of Bitcoin in 2025. The general sentiment of a continued rally has been generally bullish through January.

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