Bitcoin Stumbles After Robust US Jobs Data Spooks Risk Assets

Bitcoin sank to its lowest level this year on Thursday as it struggled to retain momentum, following a good start to the new year that saw it recapture the $100,000 barrier.

Bitcoin hit its lowest level this year on Thursday as it struggled to maintain momentum following a strong start to 2024 that saw it briefly cross the $100,000 threshold again.

The world’s largest cryptocurrency fell as much as 2.8% on Thursday to $91,785, a significant drop from its recent high of $102,733 and over 15% below its all-time peak of $108,315 hit in mid-December.

Since then, the token has recovered and lost steam again after strong U.S. jobs data that bodes well for the broader economy but signaled less appetite for risk assets.

On Wednesday, there was the second-largest withdrawal of funds from U.S. Bitcoin exchange-traded funds since they began a year ago, with $583 million in outflows.

Bitcoin scaled new highs in 2024 on the back of those ETFs and President-elect Donald Trump’s vocal support for the digital asset industry.

But that rally has lost steam since the start of the year.

The high-beta securities came under pressure as separate U.S. economic data on Tuesday and Friday further pushed out market expectations for any imminent Federal Reserve rate cuts.

Bitcoin price action has been pegged in a range between $91,000 and $102,000, partly due to the Fed’s hawkish tone last month that put a pause on any rate cuts until the second half of 2025.

Stocks began the week on a sour note, with Asian benchmarks posting hefty losses as robust U.S. jobs data and a fresh wave of American sanctions on Russia threatened to squeeze oil supplies and battered the broader financial markets.

The jolt from the sanctions coursed through the spectrum of risk assets, with the dollar gaining ground to two-year highs.

MSCI's broadest index of Asia-Pacific equities extended four days of losses as investors sold their bets on the Fed cutting interest rates further in response to robust U.S. jobs data.

Further stock losses were signaled by equity futures in Europe and the United States.

Indexes in Hong Kong, Taiwan, and South Korea fell, dragging the MSCI Asia Pacific Index down 1.1%.

Chinese equities extended their losses despite local data showing exports hit a record high last year, in what could be one of the last hurrahs before Trump pledged to levy even higher tariffs on Chinese goods on taking office next week.

The hit to global stocks signaled investors' flight-to-safety bets, which also hit cryptocurrencies. Not helping matters was a global bond market tantrum that unnerved digital asset investors.

The U.S. Treasury market is driving up borrowing costs, with広範囲な implications. The message from markets is getting louder: adjust to a sustained rise in government bond yields in the U.S. and around the world, as the world’s biggest bond market leads a reset higher in borrowing prices that is set to have broad implications.

That points to a clear risk to the narrative of global easing, even before Trump takes office and his policies begin to stoke inflationary pressures worldwide.

The Fed is now seen on hold until the second half of this year, adding to investor concerns despite a crypto-friendly administration in the White House.

The assumed safety of U.S. government debt is coming under increasing scrutiny, and as a result, yields on this asset are rising just days into 2025.

The U.S. economy showed no signs of slowing down as evidenced by Friday's massive employment report, with the Federal Reserve reconsidering when to cut interest rates further and Donald Trump taking office with a policy agenda that puts growth ahead of debt and price concerns given the soaring borrowing rates.

The rate on 10-year notes has increased by almost 1% in the past four months and is already approaching the 5% mark, which was briefly broken in 2023 and has not been seen since before the global financial crisis almost two decades ago.

Long-term U.S. Treasuries have already hit that level, with many on Wall Street now eyeing 5% as the new normal for the cost of capital.

Around the world, similar rises are being felt as investors grow more apprehensive of debt from the U.K. to Japan.

After years of a near-zero rate environment caused by emergency measures implemented following the financial crisis and COVID-19, some see the recent shift toward higher yields as a natural realignment.

Others, however, perceive disturbing new dynamics that pose serious problems.

Disruptions in the $28 trillion U.S. bond market might have far-reaching consequences due to its significance as a rate benchmark and indicator of investor mood.

With U.S. mortgage rates already up at about 7%, borrowing will be more expensive for