Why Are Bitcoin and Ethereum Prices Falling?

Bitcoin and Ethereum Prices Tumble Amid Economic Concerns

This week saw a notable decline in Bitcoin (BTC) and Ethereum (ETH), with Bitcoin falling 5% to $95,400 after briefly surpassing the $100,000 mark. Ethereum experienced a more substantial setback, plunging 8.5% in 24 hours, struggling to remain above $3,300. Other cryptocurrencies, such as Dogecoin (DOGE) and Avalanche (AVAX), also faced losses exceeding 10%.

Market Influencers

Initial market optimism had temporarily boosted Bitcoin and Ethereum prices. However, disappointing economic indicators from the United States ignited a sell-off in both cryptocurrency and traditional markets, according to Min Jung of Presto Research. Jung noted that the NASDAQ and S&P 500 also declined by over 1%, indicating broader economic concerns.

Political Landscape and Cryptocurrency

With Donald Trump's inauguration scheduled for January 20, market fluctuations are expected to continue. Analysts, such as Rachael Lucas of BTC Markets, emphasize that the new administration's cryptocurrency policies will come under scrutiny, particularly with a pro-crypto Congress and Scott Bessent's appointment as Treasury Secretary. Elon Musk's advisory role is also likely to play a significant part.

Key Drivers of Price Changes

• Bitcoin fell 5% to $95,400.
• Ethereum declined 8.5%, struggling below $3,300.
• Dogecoin and Avalanche reported losses over 10%.
• US economic data raised inflation concerns and bond yields.
• The Fed is likely to maintain high interest rates, increasing market volatility.

Upcoming Economic Data

Upcoming economic reports, specifically the Consumer Price Index (CPI) data scheduled for January 15, will provide insights into the Federal Reserve's monetary policy and inflation. Additionally, the non-farm payroll figures and Fed meeting minutes are anticipated to be crucial for future market movements.