The year started with a glimmer of hope for stocks. Major indices opened higher, heralding a cheerful 2025 for investors. But the excitement did not last. By the time the closing bell rang, the markets were painted red.
The Dow Jones Industrial Average fell 0.36%. Standard & Poor’s 500 The Nasdaq Composite Index fell by 0.22%, and the Nasdaq Composite Index fell by 0.16%. For the S&P and Nasdaq, it was the fifth straight day of losses — something they haven’t seen since April.
Behind the sell-off was a familiar villain: Treasury yields. After a brief decline in the morning, the 10-year yield rose toward 4.6% at midday. That was all it took.
Between noon and 1 p.m., the S&P 500 fell 60 points. Higher Treasury yields steal the spotlight from stocks, providing a risk-free return that’s hard to ignore. If bonds promise a safe 4.6%, why bet on stocks?
Bitcoin could benefit from Wall Street’s pain
The S&P 500 is not expected to repeat last year’s 23.31% rise. Instead, the average forecast sees a modest gain of 9%. That’s not exactly inspiring for investors looking to beat inflation or grow their wealth. Enter Bitcoin.
Unlike stocks, Bitcoin has shown an ability to boom when Treasury yields rise. Historically, their price movements are consistent with riskier technology stocks but often go in the opposite direction to longer-term bond yields.
And the expectations for Bitcoin this year are already crazy. Galaxy Digital sees it breaking $150,000 by midyear and then $185,000 before New Year’s Eve. The growth of Bitcoin ETFs is a huge catalyst.
Analysts expect these exchange-traded products to be able to manage more than $250 billion in assets by the end of the year, thanks to institutional adoption and wealth managers finally warming up to cryptocurrencies.
On January 2, BlackRock’s iShares Bitcoin Trust saw outflows of $332 million. On the flip side, Bitwise’s ETFs brought in $48.3 million, and Fidelity added $36.2 million.
On January 3, 20,000 Bitcoin options Expired With a nominal value of $1.93 billion. The maximum pain price was $97,000, and the sell-through ratio was 0.69.
Ethereum had its own share of activity, with 206,000 ETH options expiring at a maximum pain point of $3,400, for a total of $710 million. Together, these expirations were the first significant options delivery of 2025, worth $2.6 billion.
Later this month, Donald Trump will officially return to the Oval House. Markets are bracing for what his presidency might mean for the economy. Optimism is high, but short-term volatility is impossible to ignore. Many of the Fed’s upcoming meetings will not result in interest rate cuts.
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