Bitcoin Experiences Sharp Decline Amid Bond Market Turmoil

According to CoinDesk, Bitcoin initially appeared poised for a new record high on Thursday but experienced a significant drop during U.S. afternoon trading as declining bond markets impacted risk assets. The initial positive momentum was fueled by President-elect Donald Trump's statement at the New York Stock Exchange, where he expressed plans to embrace digital assets in the U.S. and establish a strategic bitcoin reserve. Concurrently, the European Central Bank reduced its benchmark interest rates by 25 basis points and suggested the possibility of further rate cuts in its dovish policy statement. Bitcoin surged to $102,500, marking its highest price since last week's record of over $104,000. However, this rally was short-lived, and the price fell below the $100,000 mark, reaching $99,800 by late Thursday afternoon. The decline in Bitcoin's value coincided with a broader sell-off in major risk assets, possibly due to negative reactions from Western bond markets to the ECB's dovish stance. The German 10-year Bund yield increased by 8 basis points to 2.21%, while the U.S. 10-year Treasury yield rose by 6.5 basis points to 4.34%. U.S. stocks also reversed early gains, with the Nasdaq dropping 0.7% and the S&P 500 falling 0.5%. Gold prices decreased by 1.8% to $2,706 per ounce during the afternoon. Altcoins generally outperformed Bitcoin, with most members of the CoinDesk 20 Index recording daily gains. Avalanche network's native token (AVAX) and Chainlink (LINK) were the top performers, rising by 9% and 13%, respectively. AVAX's performance was likely boosted by news of a $250 million token investment led by Galaxy, Dragonfly, and ParaFi Capital. Meanwhile, the Trump-affiliated decentralized finance project World Liberty Financial (WLFI) continued to purchase LINK, adding $1 million more tokens later in the day, as indicated by on-chain data from Arkham Intelligence. Ethereum, the second-largest cryptocurrency, also outperformed Bitcoin, maintaining a 1.5% daily gain after pulling back from a session high near $4,000. Analytics firm CryptoQuant noted that strong spot ETF inflows and increasing activity on the Ethereum blockchain position ETH to potentially reach new all-time highs above $5,000.