Bitcoin’s rally to $102,500 earlier this week sparked optimism, fueled by President-elect Donald Trump’s renewed support for crypto. However, market dynamics, including a bond market rout, pulled the leading cryptocurrency below the critical $100,000 mark by the end of the day.
Here’s a closer look at what drove the price swings and how altcoins like AVAX and LINK outperformed Bitcoin during this period.
Bitcoin’s Brief Rally and Fall
Bitcoin (BTC) climbed to $102,500, its highest level since last week’s record of over $104,000, following Trump’s declaration of a strategic focus on digital assets. Speaking at the New York Stock Exchange, he promised to “do something great with crypto” and announced plans to create a strategic Bitcoin reserve for the U.S.
The European Central Bank (ECB) also contributed to market optimism with a 25-basis-point interest rate cut. In its dovish policy statement, the ECB hinted at additional rate cuts, spurring hopes for a favorable macroeconomic environment.
However, the rally was short-lived. U.S. afternoon trading saw BTC dip below $100,000, closing the day at $99,800. The drop came amid negative reactions in bond markets, with the German 10-year Bund yield rising to 2.21% and the U.S. 10-year Treasury yield climbing to 4.34%. Major equity markets like the Nasdaq and S&P 500 also closed lower, shedding 0.7% and 0.5%, respectively.
Altcoins Outshine Bitcoin
While Bitcoin struggled, altcoins outperformed. Members of the CoinDesk 20 Index recorded notable gains, with Avalanche (AVAX) and Chainlink (LINK) leading the pack. AVAX surged 9% after a $250 million token investment led by Galaxy, Dragonfly, and ParaFi Capital. LINK gained 13%, supported by World Liberty Financial’s (WLFI) ongoing token purchases, adding $1 million worth of LINK to its holdings during the day, as reported by Arkham Intelligence.
Ethereum’s Steady Climb
Ether (ETH), the second-largest cryptocurrency, held onto a 1.5% daily gain, maintaining its momentum just shy of $4,000. Analytics firm CryptoQuant highlighted strong spot ETF inflows and increased Ethereum blockchain activity, suggesting ETH could soon break its all-time high above $5,000.
Bitcoin’s battle to sustain $100,000 amidst market volatility highlights the ongoing sensitivity of crypto markets to macroeconomic factors. Meanwhile, altcoins like AVAX and LINK demonstrated resilience and significant gains, signaling growing investor interest in decentralized finance and blockchain innovations.
As the cryptocurrency market evolves, these developments underscore the importance of staying informed and diversified in your crypto investments.
