CoinDesk 20 Index: 3,428.65 -7.22%
Bitcoin (BTC): $95,065.90 -5.59%
Ether (ETH): $3,348.64 -7.8%
S&P 500: 5975.38 -1.11%
Gold: $2,647.91 -0.11%
Nikkei 225: 39,981.06 -0.26%

Bitcoin's slide took it below the $95,000 mark late in the European morning while DOGE led losses among crypto majors, trading over 10% in the last 24 hours. ETH and SOL have both lost over 8%, while the CoinDesk 20 Index's measurement of the broader digital asset market is lower by more than 7.5%. Crypto-tracked futures betting on higher prices saw liquidation of $600 million, setting a relatively high level at the start of the year. Hotter-than-expected economic data from the U.S. on Tuesday shook up an already jittery bond market, sending the 10-year U.S. Treasury yield higher by another five basis points to 4.68% and within a few ticks of multi-year highs.

Some observers are optimistic that the sudden crypto dump will prove to be a blip in the long term. Strong U.S. economic data may have dampened hopes of rate cuts this year, but this -appears to be a part of a "broader sentiment shift we’ve seen before [which is] nothing unusual for crypto,” Vince Yang, CEO and cofounder of zkLink told CoinDesk. History shows these dips often pave the way for bigger bullish movements, especially with where we are in the market cycle now, and with a more crypto-friendly administration in the U.S. coming in, there’s every reason to believe we’re heading for some exciting times ahead,” Yang added.

This year is expected to be a game changer in terms of acceptance and adoption of bitcoin, Fidelity Digital Assets has said in a new report. Given macro headwinds such as currency debasement and surging fiscal deficits, not making an allocation to bitcoin could be more risky than making one, the report said. Fidelity notes that both President-elect Donald Trump and Senator Cynthia Lummis have been vocal about establishing a strategic bitcoin reserve. If the bill were to be enacted, the "political and financial game theory at play will force other nations to follow suit." If nation-states were to adopt a bitcoin accumulation strategy, it is likely that these countries would begin buying the digital asset surreptitiously, as announcing their plans would likely influence other investors to buy BTC and drive the price higher, Fidelity said.

Bitcoin's flip to a bearish sentiment in the last 24 hours coincided with a change in the market dynamic that fueled the post-election surge in both assets.

We're specifically referring to the MOVE index, or the Merrill Lynch Option Volatility Estimate Index, which measures expected 30-day volatility in the U.S. Treasury bond market.

As the second-largest financial market globally, after currencies, volatility in the fixed-income market, especially in Treasury notes, often leads to tighter financial conditions. It can trigger risk aversion across all corners of the financial markets.

Unfortunately for crypto bulls, the MOVE index is rising, having bottomed out in mid-December near 82, according to charting platform TradingView. On Tuesday, the index climbed to 102.78 after hotter-than-expected manufacturing data indicated a robust economy and persistent inflation, resulting in higher Treasury yields.

Interestingly, BTC fell 5% to $96,900 on Tuesday, while the S&P 500 declined by over 1%. The post-U.S. election uptrend in both assets lost momentum in mid-December, coinciding with the bottom in the MOVE index.

- Omkar Godbole