Bitcoin broke through $100,000 on January 6, but fell back just a day later, with a drop of 5%, currently priced at $96,664. Influenced by strong economic data, market expectations for interest rate cuts weakened, leading to rising U.S. Treasury yields and a correction in U.S. stocks, further impacting cryptocurrencies.
Moreover, Ethereum, Solana, and Dogecoin also fell, with a liquidation amount of $599 million, primarily from long positions. Despite Bitcoin's decline, recent ETFs attracted a large inflow of funds.
Bitcoin only regained its footing and broke through $100,000 on January 6, but unexpectedly could not hold it for even a day before collapsing again. A series of strong economic data cooled market expectations for interest rate cuts, causing U.S. Treasury yields to soar. Along with a simultaneous correction in U.S. stocks, Bitcoin faced its largest decline in two weeks, once again falling below the $100,000 mark.
As of the time of writing, Bitcoin is priced at $96,664, with a daily drop of 5%. Other major cryptocurrencies also saw declines, with Ethereum plummeting 8.5% to $3,370; Solana (SOL) dropping over 8% to $199.26; and Dogecoin (DOGE) falling 11% to $0.3481.
According to CoinGlass data, this round of sharp decline triggered massive liquidations of leveraged positions, with the total liquidation volume (amount) of cryptocurrency futures contracts in the past 24 hours reaching $599 million, of which over $540 million came from long positions.
The decline in Bitcoin began last night (7th), due to the U.S. stock market ending a two-day rally and turning downward. According to data from the Institute for Supply Management (ISM), the performance of the U.S. service sector in December exceeded market expectations, with the input price index rising to near a two-year high.
Additionally, the U.S. Bureau of Labor Statistics (BLS) released the Job Openings and Labor Turnover Survey (JOLTs) for last November, showing that the number of job vacancies significantly exceeded expectations, reaching a six-month high, further proving the labor market's solidity. A series of strong economic data led to a surge in U.S. Treasury yields, impacting the stock market and the cryptocurrency market.
Bob Wallden, head of trading at digital asset firm Abra, stated: "ISM data triggered a sell-off in the stock market, and due to the high correlation between cryptocurrencies and the Nasdaq index, this wave of selling quickly spread to the cryptocurrency market." He added:
After Bitcoin surpassed $100,000, some investors chose to take profits, triggering stop-loss orders in long positions, further exacerbating the downward trend.
In addition, the news of Trump's indecisive stance on trade tariff policies after his election has added uncertainty to the market. Bob Wallden pointed out that the volatility in the U.S. Treasury market has further intensified the market's cautious sentiment towards Bitcoin.
Although Bitcoin experienced a significant pullback on Tuesday, just the day before, Bitcoin spot ETFs attracted a net inflow of $987 million, marking the largest scale since November last year. On the previous trading day, the inflow into the ETF also reached $908 million.
