Bitcoin retreated below $97,000 after reaching new highs above $102,000 earlier this week, as rising U.S. Treasury yields dampened appetite for risk assets.
The pullback comes amid fresh economic data showing stronger-than-expected growth in the U.S. services sector for December, which pushed the 10-year Treasury yield higher. The yield increase typically makes risky investments like cryptocurrencies less attractive to investors.
The latest price movement highlights Bitcoin's sensitivity to broader economic indicators and monetary policy expectations. While the leading cryptocurrency has gained over 3% since the start of 2025, building on its 120% surge in 2024, the current market dynamics present new challenges.
The Federal Reserve's interest rate decisions remain a key factor influencing Bitcoin's price trajectory. After implementing its third rate cut in December, the Fed indicated fewer cuts may come in 2025 than markets initially expected. Historically, periods of rate cuts have supported Bitcoin prices, while rate hikes have created headwinds.
Despite the recent pullback, market participants remain optimistic about Bitcoin's long-term prospects, pointing to increasing institutional adoption and improving regulatory clarity in major markets. Companies with exposure to cryptocurrencies, including Coinbase and Robinhood, continue to track Bitcoin's performance closely.
As investors digest the latest economic data and Treasury yield movements, Bitcoin's price action serves as a barometer for risk appetite in the broader digital asset market. The interplay between monetary policy, economic indicators, and crypto market dynamics continues to shape trading patterns in this evolving asset class.