The cryptocurrency market saw its biggest drop this month on January 7, triggered by discouraging economic data.
Bitcoin, which had recently hit $100,000, experienced a sharp decline, losing over 4% in the past 24 hours and trading near $97,000. Other major cryptocurrencies also suffered, with Ethereum falling by 8%, Solana losing 7%, and XRP dropping by 5%. Several digital assets, including Avalanche, Dogecoin, and Chainlink, tumbled by over 9% each.
Market correction sparks large liquidations
Crypto Market Suffers Biggest Drop In A MonthThe crypto market experienced its largest sell-off in nearly a month today. Bitcoin dropped over 5%, Ethereum fell around 8%, and Solana and XRP also saw declines. The total market cap decreased by 7.6% to $3.6 trillion, with $507… pic.twitter.com/f8nXKWbDat
— The Wolf Of All Streets (@scottmelker) January 8, 2025
The market correction resulted in significant liquidations across the board. Data from CoinGlass revealed that $388 million worth of positions were liquidated within the past 24 hours, with $230 million of that occurring in the last four hours alone. Long positions accounted for most of the losses, making up $212 million of the total liquidations. Nearly 129,900 traders faced liquidations during this period, with the largest single liquidation recorded on Binance for an ETHUSDT position worth $11.9 million.
Crypto-related stocks also mirrored the downturn. MicroStrategy and Coinbase dropped their shares by 9% and 8%, respectively. Bitcoin mining firms such as Core Scientific and MARA Holdings followed suit, falling 6% and 7%, respectively.
U.S. job data and economic signals pressure markets
The market downturn coincided with the release of U.S. labor data, which heightened investor concerns. The Bureau of Labor Statistics reported 8.1 million job openings for November, the highest since May 2023 and a rise from October’s 7.84 million. Although the hiring rate dipped to 3.3% from 3.4%, the quit rate fell to 1.9%, indicating reduced worker confidence.
Strong job openings data and a 10-year U.S. Treasury yield increase to 4.69% weighed heavily on risk assets like cryptocurrencies. The Institute for Supply Management reported faster-than-expected growth in the U.S. service sector for December, fueling concerns about persistent inflation.
Federal Reserve outlook adds to uncertainty
The Federal Reserve’s stance has also added pressure on markets. Despite reducing rates for the third time last month, the central bank indicated that rate cuts in 2025 might be fewer than anticipated. Elevated rates have historically hurt Bitcoin and other risk assets as traders brace for tighter monetary policy.
Analysts warned that stronger-than-expected economic data could lead to prolonged rate hikes, further impacting traditional and digital markets. Observers noted that the tightening environment may be entering a challenging phase for investors navigating both risk assets and traditional safe havens.
The post Why Is the Crypto Market Experiencing Its Largest Drop This Month? first appeared on Coinfea.
