The crypto market faced a downturn yesterday that continued today as well. It’s down around 7%, with total market cap now at around $3.43T.
The Bitcoin price dropped 7% and is now below $96k after pumping to over $102k at the start of 2025. Ethereum is also down 8.5% now at below $3.4k.
Stock Market Selloff Triggers Crypto Decline
The latest cryptocurrency correction appears to be closely tied to the sharp decline in U.S. stock markets, particularly affecting major tech stocks. Tesla saw its stock price fall to $394.36 on January 7, marking a 4.06% decline, while Nvidia experienced an even steeper drop of over 6%, closing at around $460.00 after hitting an all-time high the previous day. Altcoins have experienced even sharper corrections than Bitcoin during this market downturn.
The broader market sentiment has turned somewhat pessimistic as rising bond yields and mixed economic data have reduced expectations for interest rate cuts. The S&P 500 reflected this sentiment with a significant single-day decline of 1.38% on January 7. The strengthening U.S. dollar has also played a role in putting pressure on crypto assets.
Cryptocurrencies saw a sharp correction due to plummeting U.S. stocks such as Nvidia and Tesla, with Bitcoin dropping below $100,000 again, and Altcoins dropping even more violently, as market sentiment turned pessimistic.In terms of options data, short-term IVs rebounded… pic.twitter.com/FJZWgI3Mdn
— Greeks.live (@GreeksLive) January 8, 2025
Options market data provides additional insight into the current situation. Short-term implied volatility (IV) has shown a slight rebound but remains at relatively low levels, suggesting the market isn’t pricing in significant future volatility. Additionally, Options Skew and Futures Appreciation metrics have remained largely stable, indicating that this correction might be primarily influenced by traditional market movements rather than crypto-specific factors.
Despite the current pullback, market analysts suggest that Bitcoin’s underlying bull trend remains intact, with the current movement being attributed mainly to the strong dollar and the broader decline in U.S. stocks.
Read also: Crypto Veteran Urges Against Selling XRP Despite the Crash, Reveals Best 20x Altcoin Picks
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