Bitcoin faced a setback on Wednesday, continuing its decline from the previous day and erasing its recent gains. The cryptocurrency, which had briefly surged past the $100,000 mark as part of a recovery from late-December losses, fell 0.3% to $96,607.7 by 00:49 ET (05:49 GMT), following a more than 5% drop on Tuesday.
The recent decline is largely attributed to rising concerns over slower interest rate cuts in 2025. Stronger-than-expected U.S. economic data, including job openings and purchasing managers index (PMI) reports, sparked fears that the Federal Reserve may reduce rates more gradually. This sentiment has weighed on risk-driven assets, with Bitcoin and other cryptocurrencies seeing significant losses in response.
In particular, inflation fears were reignited by the economic data, leading the Fed to maintain a cautious stance on interest rate cuts. The central bank’s December meeting underscored this, and Fed officials reiterated these concerns earlier this week, signaling that “higher for longer” interest rates may persist. This has implications for speculative assets like cryptocurrencies, which are highly sensitive to liquidity fluctuations. The same rate environment had previously battered the crypto markets in 2022 and 2023.
The decline in Bitcoin was mirrored across broader crypto markets. Altcoins such as Ether (ETH), XRP, Solana, Cardano, and Polygon saw significant losses, with Ethereum dropping 8.4% to $3,360.35 and XRP sliding 5.1% to $2.3084. Notably, meme tokens like Dogecoin also experienced an 11% tumble, highlighting the broad impact of investor concerns about slower rate cuts.
Also Read: Bitcoin Investor Ordered to Surrender Crypto Keys in Historic Tax Evasion Case
As the crypto market awaits additional cues from U.S. economic data and the inauguration of President Donald Trump, who has promised crypto-friendly policies, the outlook for 2025 remains uncertain. For now, Bitcoin and its peers continue to face headwinds from tightening liquidity and inflationary pressures.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
About The Author
