Bitcoin Price Dips 5% Following Strong US Economic Data Bitcoin’s price tumbled 5% within hours, falling from an intraday high of $102,712 to $97,566. This sharp decline came after strong US jobs data and ISM Services PMI signaled that the Federal Reserve may not pursue interest rate cuts anytime soon. Despite this setback, traders maintain a generally bullish outlook, anticipating market gains as pro-crypto Donald Trump prepares to take office.
Why Did Bitcoin’s Price Drop? The sudden dip in Bitcoin’s price can be traced to robust US labor and economic indicators:
- JOLTS Jobs Report: Job openings rose by 259,000 in November, reaching 8.098 million. This reflects continued strength in the labor market, which could discourage the Fed from cutting interest rates.
- ISM Services PMI: The index indicated sustained economic growth in the US, reinforcing speculation that rate cuts may not be imminent.
- Treasury Yields and Dollar Index: The 10-year Treasury yield climbed to 4.68%, a 35-week high, while the US dollar index (DXY) surged above 108.50. This combination often puts downward pressure on risk assets like Bitcoin.
Market Reaction and Bitcoin’s Performance
- Bitcoin’s 24-hour high and low were $102,712 and $97,153, respectively.
- Trading volume spiked by 27%, signaling a mix of profit-taking and renewed market caution.
- Despite the recent dip, Bitcoin has climbed over 10% in the past week, driven by positive ETF inflows and institutional interest.
Outlook Ahead of Trump’s Inauguration As Trump’s inauguration nears, many investors remain optimistic about Bitcoin’s long-term prospects. The incoming administration is expected to introduce clearer regulations for cryptocurrencies, potentially fostering a more favorable environment for digital assets.
Future Projections and Risks
- Bullish Outlook: Inflows into spot Bitcoin ETFs and the return of institutional interest suggest Bitcoin could retest previous all-time highs.
- Short-Term Caution: Analysts warn of potential volatility in March, with declining US dollar liquidity potentially leading to market corrections.
- Global Adoption: Trump’s strategic push for Bitcoin reserves may inspire other countries to follow suit, boosting overall market sentiment.
Conclusion While Bitcoin faces near-term headwinds from strong US economic data, its broader trajectory remains bullish. Traders and investors are closely watching macroeconomic developments, with the expectation that regulatory clarity and institutional adoption could propel Bitcoin higher in 2025.
