The year started with a glimmer of hope for stocks. Major indexes opened higher, teasing a cheerful 2025 for investors. But the excitement didn’t last. By the time the closing bell rang, markets were painted red.
The Dow Jones Industrial Average dropped 0.36%, the S&P 500 slid 0.22%, and the Nasdaq Composite fell 0.16%. For the S&P and Nasdaq, this was the fifth straight day of losses — something they hadn’t seen since April.
Behind the selloff was a familiar villain: Treasury yields. After a brief dip in the morning, the 10-year yield climbed toward 4.6% around midday. That was all it took.
Between noon and 1 PM, the S&P 500 bled 60 points. High Treasury yields steal the spotlight from stocks, offering a risk-free return that’s hard to ignore. If bonds promise a safe 4.6%, why roll the dice on equities?
Bitcoin could gain from Wall Street’s pain
The S&P 500 isn’t expected to repeat last year’s 23.31% rally. Instead, the median forecast predicts a modest 9% gain. 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 thrive when Treasury yields climb. Historically, its price moves align with high-risk tech stocks but often go the opposite way of long-term bond yields.
And predictions for Bitcoin this year are already pretty crazy. Galaxy Digital sees it smashing $150,000 by mid-year and then $185,000 before New Year’s Eve. The growth of Bitcoin ETFs is a big catalyst.
Analysts project these exchange-traded products could manage over $250 billion in assets by the end of the year, thanks to institutional adoption and wealth managers finally warming up to crypto.
On January 2, BlackRock’s iShares Bitcoin Trust saw $332 million in outflows. On the flip side, Bitwise’s ETF brought in $48.3 million, and Fidelity added $36.2 million.
On January 3, 20,000 Bitcoin options expired with a notional value of $1.93 billion. The max pain price stood at $97,000, and the put-call ratio was 0.69.
Ethereum had its own share of activity, with 206,000 ETH options expiring at a max pain point of $3,400, totaling $710 million. Together, these expirations were the first big options delivery of 2025, worth $2.6 billion.
Later this month, Donald Trump officially returns to the Oval. 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 Federal Reserve’s upcoming meetings won’t bring rate cuts.
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