In early 2025, the cryptocurrency market experienced worrying volatility. Bit (BTC), Ren (ETH), and other major assets have almost given back the gains of the end of last year, with Bit falling more than 6.3% and Ren falling 10% (it's said to be a "Ren" coin). In the stock market, the three major U.S. stock indices also generally fell, triggering market panic.
What caused this series of fluctuations? The core factors affecting the global economy - U.S. economic data, interest rate policy, and the Trump administration's restarted tariff plan - are the answers to all these problems.
Soaring government bond yields compress the space for risk assets
The primary reason for this round of decline is the rise in U.S. government bond yields. U.S. Treasuries, or U.S. government bonds, are bonds issued by the U.S. government, which simply means the U.S. government borrows money from investors, so U.S. Treasuries are also seen as an investment tool with extremely low risk.
As the recent economic data released by the U.S. has been strong (for example, non-farm employment data better than expected, and steady wage growth), the market's expectation of a rate cut by the Federal Reserve in the near future has cooled. It is believed that the possibility of interest rates remaining unchanged at the January 29 FOMC (Federal Open Market Committee) meeting has risen to 95%, and the possibility of rate cuts in March and May has fallen below 50%.
Further reading:Cryptocurrency is not just about the coin price! What did the U.S. rate hike and inflation affect?
In this situation, the 10-year U.S. Treasury yield has broken through 4%, the cost of borrowing money has become better, and it is natural that a large amount of capital will flow back to the bond market, further suppressing the performance of the stock market and cryptocurrency, which are risk assets. Cryptocurrency is essentially a high-risk investment. When market risk aversion sentiment rises, capital tends to flow into gold or the U.S. dollar, rather than Bit. Recently, the U.S. dollar index (DXY) has rebounded, further exacerbating this pressure.
Trump's tariff policy restart raises global market concerns
In addition, the Trump administration has again introduced a high-tariff policy, imposing new tariffs on products from China, Canada and Mexico, which directly affects the global trade pattern and also brings additional uncertainty to the financial market. The issuance of this "national economic emergency" statement not only sparked controversy within the U.S., but also made the international market worry that the trade war turmoil of 2018 might reappear.
The impact of the tariff policy is not limited to the stock market, but also affects the cryptocurrency market. Due to the overall market's concerns about economic growth slowdown, investors are choosing to cash out their holdings, and cryptocurrency has become a major area of capital outflow.
Short-term market pressure is hard to dissipate, hoping for long-term stability
Under multiple pressures, the cryptocurrency market is unlikely to see a rebound in the short term. The current expectation for the January 29 FOMC meeting shows that the possibility of a rate cut in the short term is relatively low, and the uncertainty of Trump's tariff policy will still dominate the market risk aversion sentiment. However, in the long run, as policies gradually become clearer, the resilience of cryptocurrency as an emerging asset may be able to be demonstrated again.
Currently, cryptocurrency market investors need to be patient and prudent, waiting for global economic policies to stabilize, in order to truly seize the opportunity for the next rebound.
* The content of this article was edited with the assistance of AI
〈The cryptocurrency rally in 2025 has retreated, and Ren has fallen below $3,300! What caused the decline〉This article was first published on《NONE LAND》.
