Bitcoin In Freefall : Inflation And Bond Yields Weigh On Crypto

After reaching a historic peak in December, bitcoin is undergoing a brutal correction, losing nearly 10 % of its value in just a few weeks. This drop cannot be solely explained by a simple market cycle, but by a tense economic context. Persistently high American inflation reduces the Federal Reserve’s (Fed) maneuvering room, delaying hopes of lower interest rates. This situation intensifies the pressure on risky assets, including bitcoin, which sees its appeal diminish against a rising dollar and increasing bond yields. The imminent announcement of the Consumer Price Index (CPI) on January 15 could accentuate this trend. According to Steno Research, inflation exceeding projections could trigger new liquidations, pushing BTC below 85,000 dollars. However, the danger does not solely stem from macroeconomic data. The bitcoin derivatives market remains overheated, fueling an excess of leverage that increases volatility. Amid economic uncertainties and the fragility of speculative positions, crypto operates in a zone of instability, where each economic announcement could provoke a significant movement.

A bitcoin weakened by an uncertain economic climate

Since mid-December, bitcoin has been in a downward trend, falling from 106,000 dollars to around 96,000 dollars. This decline fits into a tense macroeconomic context, marked by rising inflation and a tighter monetary policy from the American Federal Reserve (Fed). The latest employment report in the United States, published on January 10, highlighted a robust labor market, reinforcing the hypothesis of maintaining high interest rates for an extended period.

This monetary uncertainty has contributed to strengthening the US dollar, putting additional pressure on risky assets, including bitcoin. “Bitcoin seems restrained by the dollar’s strength, which is increasing due to a more restrictive Fed and new tariff threats,” explains Zach Pandl, head of research at Grayscale. At the same time, yields on 10-year Treasury bonds continue to rise, reflecting investor concerns about inflationary prospects.

Indeed, in this risk-averse climate, the upcoming Consumer Price Index (CPI), expected on January 15, appears to be a decisive factor. According to Steno Research, inflation exceeding 0.3 % could trigger a new wave of massive selling in the crypto market, potentially pushing bitcoin below 85,000 dollars.

Overheated futures markets, an additional risk

If the macroeconomic environment weighs heavily on bitcoin, the derivatives markets also amplify selling pressure. Despite the recent correction, open positions on BTC futures contracts remain at high levels, indicating that many investors are carrying excessive leverage. This situation creates an additional risk. In the event of a new drop in bitcoin, cascading liquidations could worsen volatility and intensify the market’s decline.

According to Steno Research, the threshold of 85,000 dollars could be reached if American inflation proves to be stronger than expected. “An upward deviation in CPI figures could surprise the market and generate an additional shock on crypto prices,” explain analysts. The impact of such a scenario would not be limited to cryptos. A strengthening dollar and higher bond yields would further divert investors from risky assets.

However, this brutal correction would not undermine long-term bullish prospects. Steno Research estimates that 2025 could be a record year for bitcoin, driven by lower interest rates, a more favorable regulatory climate, and the traditional post-halving effect. For now, caution is advised, as each new economic data point could redefine the market’s trajectory.

In the short term, investors must contend with lasting downward pressure, fueled by macroeconomic uncertainties and a tense derivatives market. However, Steno Research anticipates a strong recovery during 2025, driven by several catalysts. A decrease in interest rates, a more favorable regulatory framework, and the impact of the halving could create favorable conditions for a new bullish cycle. Analysts estimate that bitcoin could surpass 150,000 dollars, reaching new historical highs. Until then, volatility remains a key element of the market. Amid economic adjustments and strategic repositioning by investors, bitcoin will need to find balance before embarking on a new expansion phase. Caution is still advisable, as each macroeconomic data point can influence the market’s trajectory in the short term.