Here’s why Bitcoin, Ethereum, XRP, and other altcoins just crashed

Cryptocurrency prices fell sharply on Tuesday, erasing some of Monday’s gains as concerns about the bond market intensified.

Bitcoin (BTC) fell 4% to an intraday low of $97,700. Similarly, Ethereum (ETH), Ripple (XRP) and Solana (SOL) also fell over 5%.

The decline was in line with the risk aversion sentiment spreading to other financial markets, especially equities. The Nasdaq 100 index fell more than 1% to $19,635, while the S&P 500 fell 0.50%. Heavily dominated by technology companies, these indices tend to be more sensitive to risk sentiment.

Popular tech stocks were also affected. NVIDIA shares fell 5.4%, wiping out more than $175 billion in market value. Tesla shares fell 3%, while Super Micro Computer lost 1.5%.

This selloff was likely driven by rising U.S. bond yields ahead of key economic reports, including nonfarm payrolls data and Federal Reserve minutes. While the 10-year bond yield increased by 1.7% to 4.70%, the 30-year and 5-year bond yields increased to 4.61% and 4.50%, respectively.

Rising bond yields generally indicate a more hawkish stance is expected from the Federal Reserve. At its December meeting, the Fed signaled two smaller interest rate cuts in 2025 than previously expected. The minutes of the meeting, which will be released on Wednesday, January 8, will provide more insight into the Fed’s discussions.

Bitcoin and other cryptocurrencies faced additional pressure after a Labor Department report showed job openings rose to a six-month high, driven by the services sector.

The report comes ahead of official nonfarm payrolls data due on Friday. A stronger-than-expected employment report could strengthen the Fed’s hawkish approach, as a tightening labor market will keep inflationary pressures high.

Some analysts believe rising bond yields could crash Bitcoin, altcoins and other assets. Moody’s Chief Economist Mark Zandi warned in a recent note that rising budget deficits under Donald Trump could push yields even higher. This will lead to a shift from risky assets like crypto to money market funds.