Bitcoin’s (BTC) rally to $100,000 has been dampened by soaring U.S. Treasury yields and a strengthening dollar, raising concerns about the sustainability of the “Trump trade.” While initial optimism surrounded U.S. President-elect Donald Trump’s pro-crypto stance, recent market shifts have triggered a sharp reversal in digital assets.Rising Treasury Yields Pressure BitcoinBitcoin's Decline Amid Bond Yield SurgeBitcoin (BTC) briefly touched $100,000 at the start of January but has since retreated, posting a 6% decline over the past 30 days. The surge in U.S. Treasury yields, with the 10-year note nearing 4.70% and 30-year bonds hitting a 14-month high, has reduced liquidity in risk markets, making traditional instruments like bonds more appealing.“Higher Treasury yields reduce global liquidity, which is essential for Bitcoin and crypto growth,” said Eloísa Cadenas, Chief Innovation Officer at Monetae.Federal Reserve's ImpactThe Federal Reserve’s cautious approach to interest rate cuts has added to the uncertainty. Despite cutting rates for the third time in 2024, the Fed signaled a slower pace of easing moving forward, further weighing on Bitcoin's momentum.The Correlation Between Bitcoin and MarketsBitcoin’s Link to NasdaqBitcoin’s (BTC) performance remains closely tied to the Nasdaq, with a current correlation of 64%, according to Robert Wallden, Head of Trading at Abra. He noted:“Bitcoin and digital assets are seeking a new catalyst. While volatility has risen, dips could present buying opportunities as long as $82,000 holds.”Altcoins and Broader Market ImpactsAltcoins have felt the brunt of increased volatility, triggered by strong economic data and inflation fears. Meanwhile, Wall Street’s major indexes, including the tech-heavy Nasdaq, have trended lower in recent weeks.Can the Trump Trade Revive Bitcoin?Pro-Crypto Policies Offer Long-Term HopeThe Trump administration’s appointments of cryptocurrency advocates signal a favourable institutional framework for digital assets. Michael Strobaek, Global CIO at Lombard Odier, highlighted Trump’s influence:“Trump’s presidency has historically boosted Bitcoin (BTC) by $40,000. Despite current corrections, this trend should continue.”Optimism Amid CorrectionsAnalysts remain hopeful for a long-term Bitcoin rally, with Cadenas adding:“The Fed’s policies may cause short-term fluctuations, but the $70,000 Bitcoin price two months ago shows the sector’s resilience.”While concerns over the U.S. deficit and potential tariff wars linger, the prospect of pro-crypto policies under Trump offers optimism for Bitcoin and the broader cryptocurrency market, according to Cointelegraph.
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