A sharp crypto market decline over the past 24 hours catches many on the wrong side of the trade, with Bitcoin slumping to new support levels.
Just a little over 24 hours ago, significant optimism appeared to be returning to the crypto market as assets had soared with the turn of the new year, culminating in Bitcoin reclaiming the $100,000 price point.
However, fast forward to today and the market is back in the red, having wiped out thousands of leverage traders.
204K Crypto Traders Wiped Out
Over 204,000 traders have been liquidated in the past 24 hours, with total liquidations estimated at $627 million, according to CoinGlass data at the time of writing 
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204K Crypto Traders Wiped Out
Over 204,000 traders have been liquidated in the past 24 hours, with total liquidations estimated at $627 million, according to CoinGlass data at the time of writing.
Crypto liquidation heatmap
Crypto liquidation heatmap Source CoinGlass
The bulk of these liquidations, about $566 million, were long positions as the crypto market experienced a sharp decline over the past 24 hours, catching many on the wrong side of the trade.
Bitcoin, for one, tanked roughly 7% from highs near $103,000 to lows around $96,000. Altcoins were not left out as Ethereum, XRP, and Solana slumped roughly 10%, 8%, and 11%, respectively, from their respective highs.
U.S. Economic Data to Blame?
The recent market volatility appears linked to U.S. economic data. On Tuesday, January 7, the U.S. Bureau of Labor Statistics released a November 2024 jobs report showing 8.1 million jobs open at the month’s end, the highest job openings since May 2023 and higher than the 7.74 million estimated by economists.
The strong numbers appear to have sparked broad risk-off sentiment that, beyond crypto, sent tech stocks like Nvidia and Tesla dumping. The market reaction suggests that investors now believe the Federal Reserve is less likely to ramp up interest rate cuts to bolster liquidity as the economy still shows flickers of strength.
Over the years, Bitcoin and the broader crypto market have proven significantly sensitive to this liquidity. In times of high liquidity, some excess capital often makes its way to crypto, offering the market a boost.
However, a forecast of liquidity staying lower for longer sees capital fleeing to safe-haven assets as the expectations of inflows to risk assets like crypto reduce.
A prime example of this relationship between crypto and global liquidity came in December 2024 when Bitcoin first plummeted below the $100,000 price point as the Fed disclosed that it would only pursue two interest rate cuts in 2025 instead of an initially projected four.
Despite the recent market jitters, crypto options trading solution provider Greeks.live has maintained that Bitcoin remains firmly in a bull market.
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