Bitcoin (BTC) has faced a pullback from its early 2025 highs, retreating back to the $93,000 level after briefly surpassing the $100,000 threshold. This dip comes as volatility in global markets, particularly in the U.S. Treasury bond market, has triggered renewed concerns among investors. Rising bond yields, which have hit multi-month highs, are fueling fears of persistent inflation and reduced expectations of future interest rate cuts by the Federal Reserve.

The surge in long-term bond yields is not just confined to the U.S., with other major economies such as Japan and the U.K. also seeing increases. In the U.K., the long-end bond yields have reached levels not seen since 1998, signaling a broader shift in global market conditions. As inflation-adjusted bond yields rise, the relative attractiveness of fixed-income investments over riskier assets like Bitcoin becomes evident, leading to a pullback in the price of the leading cryptocurrency.

Additionally, data released from the Federal Reserve’s December meeting points to concerns about inflation and the economic impact of incoming political policies under President-elect Donald Trump. These factors have altered market expectations, pushing the anticipated timing of the next rate cut from the Fed to mid-2025. This shift has led to an increase in risk aversion among investors, with Bitcoin, along with major stock indices such as the S&P 500 and Nasdaq, reflecting these macroeconomic pressures.

Despite the recent downturn, the options market for Bitcoin remains robust. The value of active call options on Bitcoin remains high, with a total notional value of nearly $15 billion, signaling that investors continue to bet on the long-term growth of Bitcoin. The most popular call options are centered around the $120,000 strike price, with significant open interest at levels above $100,000, reinforcing a bullish outlook for the cryptocurrency.

The current market sentiment is further bolstered by optimism around a potential shift in U.S. regulatory policies under the incoming Trump administration. Ripple’s strong performance and increased business activity following Trump’s victory have fueled speculation that favorable regulations for digital assets could soon materialize, giving Bitcoin and the broader cryptocurrency market a potential boost.

Traders are looking to key upcoming events, including the U.S. nonfarm payrolls report and the upcoming inauguration of President Trump, as catalysts that could lead to renewed optimism in the market. With a favorable regulatory environment potentially on the horizon, Bitcoin could see a resurgence in momentum if these political and economic developments play out favorably.