Bitcoin Plunges Below $79,000 as Fed Rate Hike Odds Soar

Bitcoin's price dropped to approximately $78,400 on Tuesday, marking a decline of over 1% in the session. The cryptocurrency has now struggled for two consecutive weeks to secure a closing price above the $80,000 threshold.

The broader cryptocurrency market experienced similar downward pressure on Tuesday, with Zcash suffering the most significant losses, declining nearly 5%. Despite this setback, it retains an impressive 33% weekly increase, positioning it as the strongest performer among large-cap digital assets.

Employment data released on Tuesday showed American employers added 162,000 positions in August, exceeding economist projections by nearly threefold. This elevated the market-implied likelihood of a 25-basis-point Federal Reserve rate increase at the September 16 policy meeting to approximately 60%.

The rise in interest rates typically creates headwinds for Bitcoin and comparable risk assets, making yield-generating investments more attractive and tightening overall financial conditions. The 10-year Treasury yield remained near 4.8%, adding to inflation concerns ahead of Friday's consumer price index release.