Dogecoin (DOGE) led the losses among major cryptocurrencies as Bitcoin (BTC) dropped to approximately $96,000. The decline has been attributed to rising U.S. Treasury yields spurred by stronger-than-expected economic data.
Widespread Losses in the Crypto Market
DOGE saw a steep decline of 10%, while other major tokens like Solana (SOL), Cardano (ADA), BNB Chain (BNB), and Ether (ETH) all suffered losses of at least 7%. Bitcoin itself fell by 5.5%, contributing to a 7.1% drop in the CoinDesk 20 (CD20) index.
Futures Market Liquidations Hit $560 Million
Futures markets recorded significant liquidations, totaling $560 million, a relatively high level compared to earlier this year. Liquidations occur when exchanges forcibly close leveraged positions, highlighting the risks of using margin in volatile markets.
Impact of U.S. Economic Data
The Institute for Supply Management (ISM) Services Index exceeded expectations, with its price payments measure reaching its highest level since early 2023. Additionally, U.S. job openings surpassed forecasts, intensifying concerns about Federal Reserve interest rate policies. These developments pushed the 10-year Treasury yield to its highest level since May, adding downward pressure on risk assets like cryptocurrencies.
Expert Insights on Market Trends
Vince Yang, CEO of zkLink, noted in a Telegram message, “Markets took a hit yesterday, with Bitcoin and Ethereum dropping significantly. Stronger-than-expected U.S. job data reduced the likelihood of more rate cuts this year. This is not unusual for crypto.”
QCP Capital, a Singapore-based trading firm, added, “We expect a turbulent January for crypto markets. The reinstatement of the U.S. debt ceiling could trigger additional volatility.”
Outlook for Recovery
Market observers suggest that while Tuesday’s drop is significant, the long-term potential for a rebound remains strong. Investors are advised to monitor the impact of economic data on crypto assets closely.
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