Bitcoin Drops Below $98K as Strong U.S. Economic Data Triggers $300M in Liquidations.
Bitcoin (BTC) dropped over 4%, slipping below $98,000, while major altcoins like ETH and SOL fell by 6%-9%. The downturn was fueled by stronger-than-expected U.S. economic data, which led to renewed highs in bond yields and diminished investor hopes for Federal Reserve rate cuts this year.
Key economic indicators included:
JOLTS Job Openings: November openings unexpectedly rose to 8.1 million from 7.8 million, surpassing expectations of 7.7 million.
ISM Services PMI: December’s index hit 54.1, exceeding predictions of 53.3 and November's 52.1. The Prices Paid subindex soared to 64.4, significantly above the forecasted 57.5.
These reports disrupted the bond market, pushing the 10-year U.S. Treasury yield to 4.68%, close to multi-year highs. The ripple effects were felt across markets, with the Nasdaq falling over 1% and the S&P 500 declining 0.4%.
Bitcoin dropped from $101,000 during European trading hours to $97,800 after the data release, erasing the previous day's gains. Altcoins experienced steeper losses, with ETH, SOL, AVAX, and LINK tumbling by 6%-9%.
The price decline liquidated nearly $300 million in long positions across crypto derivatives markets, marking the year's first significant leverage wipeout, according to CoinGlass.
Investor sentiment shifted further, with reduced expectations for Federal Reserve rate cuts. While no rate cut is anticipated at the January meeting, the likelihood of a cut in March dropped from 50% to 37%. For the entire year, only one 25-basis-point cut is now expected.
