Bitcoin Extends Losses as U.S. Rate Concerns and Government Sales Weigh on Market

Bitcoin edged lower on Monday, marking its third consecutive day of decline, as stronger-than-expected U.S. payroll data heightened caution among traders. This reinforced the Federal Reserve’s outlook for limited interest rate cuts in 2025, adding to pressure on the cryptocurrency market.

Bitcoin slipped 0.3% to $94,268.7 by 01:12 ET (06:12 GMT), continuing last week’s downtrend that saw the token decline in six out of seven sessions. The sell-off has been exacerbated by concerns over potential government sales of seized Bitcoin, eroding market sentiment further.

Rate Jitters Raise Liquidity Concerns

Robust U.S. labor market data released on Friday fueled expectations of fewer rate cuts in the near future. The U.S. economy added 256,000 jobs in December, far exceeding forecasts of 153,000, while the unemployment rate dropped to 4.1% from 4.2%.

This unexpected strength in the labor market is likely to influence the Federal Reserve’s cautious stance on monetary easing. Higher interest rates generally strengthen the U.S. dollar and reduce liquidity in financial markets, creating a challenging environment for Bitcoin and other cryptocurrencies.

Additionally, elevated Treasury yields, which have been associated with downward pressure on Bitcoin prices, remain a concern. Some analysts suggest that sustained high yields could drive Bitcoin’s value down to around $90,000 in the coming months.

Government Bitcoin Sales Add to Market Pressure

Adding to Bitcoin’s struggles are reports of potential cryptocurrency sales by the U.S. government. Last week, reports surfaced that the Department of Justice had secured court approval to sell approximately $6.5 billion worth of Bitcoin confiscated from the Silk Road black market.

Historically, government liquidations of seized Bitcoin have introduced additional supply into the market, contributing to price declines. The prospect of future sales could dampen investor sentiment further, with some market participants speculating that this trend may undermine any strategic Bitcoin reserve initiatives under the Donald Trump administration.

Altcoins Face Steeper Declines

The broader cryptocurrency market mirrored Bitcoin’s weakness, with most altcoins registering sharper declines.

Ethereum, the second-largest cryptocurrency, fell 1.6% to $3,229.02, while Solana dropped 1.3%. Polygon and Cardano saw steeper losses, declining by 4.8% and 6.2%, respectively. Meme token Dogecoin also shed 3.2%.

Bucking the trend, XRP gained 3.8%, trading at $2.5139, showing some resilience amid an otherwise bearish market.

With rate hike fears, government actions, and liquidity concerns continuing to dominate the narrative, Bitcoin and the broader cryptocurrency market face significant headwinds in the near term. Investors are closely monitoring macroeconomic indicators and regulatory developments for signs of stabilization or further volatility.