Dogecoin (DOGE) led losses among the crypto majors as bitcoin (BTC) fell to nearly $96,000, a dump attributed to new economic data that raised US treasury yields.
DOGE fell 10%, with Solana’s SOL, Cardano’s ADA, BNB Chain’s BNB and ether (ETH) down at least 7%. Bitcoin fell 5.5%, while broad-based CoinDesk 20 (CD20)a liquid index that tracks the largest tokens by market cap, fell 7.1%.
Crypto-tracked futures betting on higher prices saw a liquidation of $560 million, shows the datawhich sets a relatively high level at the beginning of the year.
Crypto losses tracked those in US stocks. The Institute for Supply Management’s (ISM) latest report on US service providers was stronger than expected, with the price proposal reaching its highest point since early 2023.
At the same time, job openings in the US rose more than expected. These developments led to declines in Treasury securities of various maturities, pushing the 10-year Treasury yield to its highest since May.
A liquidation occurs when an exchange forcibly closes a trader’s position due to an inability to meet margin requirements. When many traders are forced to sell at once due to long liquidations, it creates a cycle in which falling prices lead to more liquidations, causing prices to fall.
Because of this, market watchers consider Tuesday’s drop a blip in the long run.
“Markets took a hit yesterday, with Bitcoin and Ethereum falling sharply, mostly because stronger-than-expected US jobs data dimmed hopes for more rate cuts this year, ” shared Vince Yang, CEO and cofounder of zkLink in a Telegram message. “This is the kind of broader sentiment swing we’ve seen before, nothing out of the ordinary for crypto.”
“That being said, we are still optimistic. History shows that these downturns often pave the way for larger bullish moves, especially where we are in today’s market cycle, and with the arrival of a more crypto-friendly administration in the US, there’s every reason to to believe we are on our way to something exciting. times ahead,” added Yang.
Singapore-based QCP Capital, however, maintains their view of a shaky period for crypto markets in January.
“It will not be smooth sailing in January, because there are structural risks,” the QCP said in a Telegram broadcast on Wednesday. “The US Treasury debt ceiling reinstatement is expected to be reinstated in the middle of the month, requiring the Treasury to adopt “extraordinary measures” to fund government spending.”
“This could trigger market volatility as discussions on the issue intensify,” QCP added.
