Bitcoin Drops Below $100K as Strong U.S. Economic Data Shakes Crypto Markets

Outline:

• Bitcoin Falls Below $100K: BTC drops 4% to $97,800 as strong U.S. economic data shakes crypto markets.

• Impact of U.S. Economic Reports: Job openings and ISM Services PMI exceed expectations, boosting Treasury yields and unsettling risk assets.

• Altcoin Declines: Ethereum, Solana, Avalanche, and Chainlink suffer losses of 6%-9% following BTC’s downturn.

• Market Liquidations: Nearly $300 million in long positions liquidated, marking the year’s first significant crypto sell-off.

• Rate Cut Expectations Diminish: Investors revise 2025 Federal Reserve rate cut probabilities after robust economic indicators.

Bitcoin (BTC) fell below $100,000 on Tuesday morning in the United States, as two more grounded-than-expected U.S. financial data prints dampened computerized resources’ magnificent early-year momentum.

In a recent report on Tuesday, CoinWealthReport.com pointed out how the increase in mining output of spot Bitcoin ETFs could result in Bitcoin drops.

The Department of Work Measurements’ Shocks job opportunities for November unexpectedly increased to 8.1 million from 7.8 million the previous month, effectively outperforming examiner expectations of a 7.7 million decrease.

Delivered concurrently, the ISM Administrations Buying Supervisors Record, a month-to-month measure of the degree of financial movement in the administration sector, came in at 54.1 for December, above expectations of 53.3 and well ahead of November’s 52.1. The Costs Paid subindex was extremely high at 64.4, compared to the previous month’s averages of 57.5 and 58.2.

While each report is likely to be a significant market mover, when combined, they sparked a generally jittery security market, driving the 10-year U.S. Treasury yield higher by five basis points to 4.68%, just a few ticks shy of long-term highs. The action pushed U.S. markets lower, with the Nasdaq down more than 1% in late morning trading and the S&P 500 down 0.4%.

BTC, which had traded just around $101,000 during the European evening hours, fell to $97,800 on the news, giving up previous gains and falling 4% in recent hours. Ethereum’s ether (ETH) and Solana’s SOL fell 6%-7%, while Torrential slide’s AVAX and Chainlink’s Connection dropped 8%-9%.

According to reports, the rapid fall in costs sold about $300 million in long positions across subsidiary markets betting on growing costs, indicating the year’s largest significant influence flush.
Financial supporters are also revising their expectations for rate drops in 2025 as a result of the strong data.

While market participants had previously discounted the possibility of a rate cut at the Federal Reserve’s January meeting, they now see only a 37% chance of a facilitating move at the national bank’s Walk meeting, down from nearly half seven days earlier, according to the CME FedWatch device. Looking further ahead, the prospects of a rate drop in May are currently far under half. Looking ahead to 2025, Kyle Chapman of Ballinger Gathering highlighted that financial backers are now assessing only one 25 basis point rate drop for the entire year.

Impact of Bitcoin Drop on the Market

The strong U.S. economic data and subsequent Bitcoin drop below $100K affect the crypto market and investors in several ways:

1. Increased Volatility: The sharp decline in prices triggers market-wide sell-offs, creating heightened volatility that can deter risk-averse investors.
2. Liquidation Risks: Liquidations of $300 million in long positions show the vulnerability of leveraged traders, causing losses and reducing market confidence.
3. Shifting Sentiment: Strong economic data and rising Treasury yields reduce the appeal of high-risk assets like cryptocurrencies, impacting investor sentiment.
4. Tighter Monetary Policy Expectations: Reduced odds of Federal Reserve rate cuts may sustain pressure on crypto markets by making traditional assets more attractive.
5. Opportunities for Buyers: Price corrections may create buying opportunities for long-term investors confident in cryptocurrency fundamentals