Pre-Inauguration Jitters Send Crypto Market Lower as Bitcoin (BTC) Nears $93K

Bitcoin (BTC) slipped to nearly $93,000 on Wednesday as fresh economic data sent U.S. treasury yields soaring, leading to a fall in equities.

Fresh economic data showed that the U.S. service sector expanded at a faster-than-expected pace in December, with a measure of prices paid by service providers rising to its highest since early 2023, according to the Institute for Supply Management (ISM). The strong data points to continued inflationary pressures in the economy.

As a result, U.S. treasury yields, which move inversely to prices, jumped sharply, with the 10-year yield rising to nearly 1.88%. Higher yields tend to drive資金flows into safer assets, such as bonds, while riskier assets, like stocks and cryptocurrencies, usually suffer.

Bitcoin’s price has been closely tracking the S&P 500 futures this year, with a high correlation between the two, as noted by several traders. Hence, the performance of the broad-based U.S. stock index could largely influence BTC’s price direction in the coming days.

Options on the broad-based S&P 500 now reflect greater downside risk than they did a year ago — a sign that traders are bracing for a potential sell-off in the coming months, according toBloomberg data.

The S&P 500 futures slipped into the red on Wednesday after hitting a record high earlier this week. Meanwhile, the CoinDesk 20 (CD20) index, which tracks the performance of the largest 20 cryptocurrencies, dropped 2.87% in the past 24 hours, adding to Wednesday’s 7% decline.

Among majors, Cardano’s ADA led losses with a 9.8% decline in the past 24 hours. The token’s price slipped to around $3.43 on Thursday morning.

Solana’s SOL, BNB Chain’s BNB and ether (ETH) slipped over the past 24 hours, down nearly 10% since Monday. ADA’s losses were steeper at around 16%.

However, major cryptocurrencies have largely erased those losses in the past few hours, with ADA trading down 2.3% over the past seven days. Still, traders booked profits on a short-lived rally earlier in the week, with major tokens showing a negative return over the past seven days.

According to Singapore-based QCP Capital, traders should watch for new U.S. economic data on Friday before further positioning.

“All eyes are on this week's FOMC and NFP releases, which are expected to further influence Bitcoin's price trajectory,” the firm said in a Thursday market broadcast on Telegram. “With market anticipation building, we believe Bitcoin's pullback is merely a pause, setting the stage for a bullish rally as Trump's inauguration fuels optimism.”

The Nonfarm Payrolls (NFP) report is due on Friday and will provide critical insights into job creation or loss in the U.S. The NFP number, which excludes jobs in the agriculture sector, is closely watched by economists, policymakers and investors as a barometer of the economy's health.

Strong NFP numbers indicate a robust economy, hinting at possible interest rate hikes, which tends to be bad for risk assets like bitcoin. Poor NFP figures suggest that rates will remain low or decrease, benefiting risk assets.