Bitcoin dropped 5% to $96,602, breaking below the $97,000 mark as positive US economic data raised concerns over delayed Federal Reserve rate cuts.
This decline led a broader crypto market downturn, wiping 7.2% off the total market cap, now at $3.5 trillion.
The drop followed reports showing a surprise increase in job openings and a strong services sector in December, pointing to a resilient economy.
As a result, Treasury yields surged to their highest levels since April, reflecting expectations that the Fed may keep or even raise interest rates.
Everyone: “ OMG Bitcoin just crashed -5%, it’s over “
— naiive (@naiivememe) January 8, 2025
People who’ve been in crypto for 6 years : pic.twitter.com/5FTGAYxPwu
These higher rates make riskier assets like Bitcoin less attractive compared to safer investments like bonds.
The downturn also saw $555 million in long positions liquidated in the derivatives markets, marking the first major liquidation event of the year.
The market’s volatility is expected to continue as traders adjust leverage and await key events like Donald Trump’s inauguration on January 20 and the Fed’s interest rate decision on January 29.