Bitcoin Price Drop Triggers $504 Million Liquidation in Crypto Market

Bitcoin Price Struggles Below $100,000: Will Bears Take Control in 2025?

Bitcoin Price Drop – Bitcoin experienced a sharp decline on January 7, 2025, dropping by over 5% to $96,200 after briefly touching the $100,000 mark in the previous session. The correction came following stronger-than-expected U.S. economic data, which suggested a resilient economy and strengthened expectations that the Federal Reserve may slow down its plans for interest rate cuts in 2025.

U.S. Economic Data Drives Market Sentiment

Recent data revealed that U.S. services sector activity accelerated in December, and job openings increased in November, indicating that the labor market remains tight. The Institute for Supply Management (ISM) reported that the U.S. services sector PMI was higher than anticipated, which fueled investor concerns that the Federal Reserve may not ease interest rates as quickly as previously expected. This shift in expectations has led markets to price in just a 1 rate cut for 2025, down from the earlier forecast of 2 rate cuts, according to the CME FedWatch Tool.

At 10:43 AM IST, Bitcoin was trading at $96,400, reflecting a 5.4% decline from the previous session. During the day, it reached an intraday high of $102,022 but fell as low as $96,132.

Leverage Liquidations and Crypto Market Decline

The pullback in Bitcoin and the broader crypto market triggered a $504 million liquidation of long positions within just 24 hours. This marked the first major leverage shakeout of the year. Vikram Subburaj, CEO of Giottus, highlighted the significant impact of the U.S. 10-year treasury yield, which rose to 4.68%, close to multi-year highs, driving the decline in crypto asset prices.

Altcoins also followed suit, with Ethereum dropping 9%, Solana falling 9%, and XRP down by 4.3%. Dogecoin and Shiba Inu saw particularly severe losses, with drops of 10.7% and 10.2%, respectively. As a result, the global crypto market capitalization decreased by 6.15%, reaching $3.36 trillion.

Stablecoins and Bitcoin’s Market Dominance

Despite the overall downturn, the volume of stablecoins surged to $158.08 billion, representing 92.97% of the total 24-hour crypto market volume, as per data from CoinMarketCap. In line with Bitcoin’s decline, its market capitalization fell to $1.907 trillion, with its dominance standing at 56.8%.

Technical Analysis: Bearish Outlook for Bitcoin

From a technical perspective, Sathvik Vishwanath, CEO and Co-Founder of Unocoin, suggested a bearish outlook for Bitcoin. With Bitcoin trading around $96,500, there is a potential downside towards $95,195, with further support at $90,000 and $87,055. This bearish trend is further confirmed by the 50-day EMA price movement. However, if Bitcoin manages to break above $99,785, a reversal in trend could be seen, signaling the potential return of the bullish momentum.

As the year progresses, investors will continue to closely monitor the U.S. economic data, Federal Reserve actions, and Bitcoin’s price movement as key indicators for future market direction.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.