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As the crypto market remains uncertain over Microsoft and Amazon <a href="https://yellow.com/news/bitcoin-meets-big-tech-can-microsoft-and-amazon-make-high-stock-gains-with-btc-investment">announcing</a> their Bitcoin (<a href="https://yellow.com/asset/btc">BTC</a>) investment, economists have rung the alarm bell of a possible stock market and crypto <a href="https://crypto.news/economist-explains-why-crypto-and-stock-prices-may-crash-in-2025/">crash </a>as we go into the new year. 
In 2024, stock and crypto prices soared due to rate cuts announced by central banks and strong earnings before and after the US elections. 
This caused Bitcoin to witness an unprecedented rally, which made it reach the milestone of $100k, nearly touching the $105,000 mark. The global crypto market cap also saw a phenomenal 120% growth this year. 
US stock indices like Dow Jones, Nasdaq 100 and S&amp;P 500 grew more than 20% this year. 
The unprecedented surge has made the market and analysts optimistic about a continued bullish run for crypto and stocks. 
Experts like Oppenheimer have already forecasted that the S&amp;P 500 will rise to 7100 from its current 6070 point because of its robust fundamentals. 
The Chief Investment Officer (CIO) of Bitwise Matt Hougan has also made similar predictions when he said that Bitcoin will eventually rally to $3 million as governments and corporates adopt the cryptocurrency as a digital asset. This is already visible in MicroStrategy opting for BTC purchase which has pushed big techs like Microsoft and Amazon into the foray. 
However, the Chief Economist at Moody’s Mark Zandi has rang the alarm bell, asking for a cautious approach as both crypto and stocks are overvalued. 
According to Zandi, the ongoing stable bullish run is due to the lack of any major bearish catalyst in the market. 
Zandi warned that such a bearish catalyst will arise soon from the Treasuries market which saw a dramatic expansion in the last few years. This can be seen in how the public debt in the US is increasing by $1 trillion every four months. At present, the public debt has surpassed $36.2 trillion. 
“I’ve argued that most asset markets appear overvalued, bordering on frothy. Stocks, corporate bonds, single family housing, crypto and gold, quickly come to mind. But what could be the catalyst for them to sell off? How about a meaningful correction in the Treasury bond market”, Zandi said in a post on the social media platform X on Sunday, December 8. 
<h2 id="high-yielding-bond-market-to-cause-the-dip">High-yielding bond market to cause the dip</h2> 
As per Moody's chief economist's predictions, the bond market will turn highly volatile as we enter 2025 because of the Federal Reserve's exiting quantitative tightening. 
Zandi further pointed out how Japan has reduced buying of US bonds and China is no longer making any fresh purchases. 
This will make hedge funds purchasing bonds leave the market in bulk when problems start to emerge. However, the US deficits are also likely to rise as Donald Trump enters the White House next month. 
Hence, Zandi thinks high bond yields are likely to surge which will lead to rotation from overvalued assets like crypto and stocks. 
Zandi’s predictions are validated by recent history which shows that stocks and cryptos dip significantly when bond yields spike. A classic example of this is the 10-year bond yields jumping to 4.3% from 1.33% in 2022 when the Feds hiked the rates to tackle inflation. 
That led to Bitcoin going down 64% that year while US stocks like Dow Jones and S&amp;P 500 saw an 8.8% and 19% dip respectively. 
In 2024, these assets surged as bond yields dropped due to Federal rate cuts. 
<h2 id="large-scale-debts-to-be-a-turning-point-for-blockchain-development">Large scale debts to be a turning point for blockchain development?</h2> 
Zandi's predictions are also <a href="https://www.bitget.com/news/detail/12560604409576">echoed</a> by other experts like the CEO of the DeFi platform YouHodler, Ilya Volkov who said that the Bitcoin is likely to crash in 2025, going down to the $60,000-$65,000 range. 
“However, broader financial instability and currency devaluations may catalyze the emergence of large-scale debt markets utilizing cryptocurrencies, including loans and bonds,” Volkov said in a post. 
He further elaborated on the matter by saying, “This development could mark a turning point in the strategic adoption of blockchain technology, further integrating it into the global financial system”. 
As of December 10, Bitcoin is down 1.15% in the last 24 hours to trade at $97501 with a 90.45% surge in its trading volume which stood at $114.62 billion while the market cap declined to $1.93 trillion.

Crypto Market Crash in 2025? Experts Link Bond Yields to Potential Downturn

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