Bitcoin Slips Towards $42K as Interest Rates Soar; Chainlink's LINK Defies Crypto Slump

Federal Reserve Chair Jerome Powell reiterated his hawkish stance on rate cuts in a Sunday interview, weighing on risk assets.

Feb 7, 2024 - 10:30
Feb 7, 2024 - 10:32
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Bitcoin Slips Towards $42K as Interest Rates Soar; Chainlink's LINK Defies Crypto Slump
BTC Market Cap

Bitcoin price on February 5 

  • Cryptocurrencies slid lower Monday with bitcoin nearing $42,000 as soaring U.S. interest rates amid strong economic data, hawkish Powell weighed on prices.
  • Bitcoin could rise to $70,000 by year-end benefitting from favorable macro environment, Markus Thielen said.

Crypto markets slumped on Monday as U.S. interest rates continued to soar on strong economic data and Federal Reserve Chair Jerome Powell reiterating his hawkish stance from last week.

Bitcoin (BTC), the largest crypto by market capitalization, slipped to $42,200 late Monday from as high as $43,400 earlier in the day. At press time, it was lower by 1.2% over the past 24 hours.

Almost all cryptocurrencies endured similar or greater losses during the day, highlighted by the broad-market crypto index CoinDesk20's {{CD20}} 1.3% decline, with 18 assets in that gauge declining. Native token of Chainlink (LINK), a software platform that connects blockchains with the outside world, was the biggest gainer among CD20 constituents with a modest 2% advance during the day.

The slump in crypto prices happened as the 10-year U.S. Treasury bond yield jumped another 14 basis points during the day, extending its two-session rise to 30 basis points.

Fueling the move was a Sunday night 60 Minutes appearance by U.S. Federal Reserve Chair Jerome Powell at which he confirmed that the Fed has little intention of cutting rates in March, as markets had previously expected.

And following Friday's blowout employment numbers, there was more solid economic news on Monday, with the ISM Services index unexpectedly rising to 53.4 in January versus December's 50.5.

Key U.S. stock indexes, the S&P 500 and the tech-centric Nasdaq 100, both closed with small declines.

Bitcoin to $70K by year-end

Despite today's loss, BTC was still holding up above $42,000, a significant support level for prices with buyers stepping in, but risk appetite is currently low as crypto markets lack fresh investment narratives, SwissBlock analysts said in a Monday report.

"Exclusive drivers for the crypto market, such as BTC ETFs, have already played out, leaving players waiting for the next significant signal," the report noted.

On the longer term, 10x Research analyst and Matrixport head of research Markus Thielen sees the largest crypto to rally to $70,000 by the end of 2024, some 65% higher than current prices.

"Supported by the macro environment, monetary tailwinds, the U.S. election cycle, and gradually increasing demand from TradFi investors allocating to bitcoin ETFs, a bitcoin rally to $70,000 appears plausible,” 

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