Today, January 7, 2024, the cryptocurrency market is facing a notable downturn, with significant price drops across various digital assets. Bitcoin (BTC), the leading cryptocurrency by market capitalization, has seen a decline of over 5%, plummeting from $102,060 to $96,865 in just a few hours. This rapid drop has triggered liquidations totaling approximately $293 million within a four-hour window, according to Coinglass, a reputable on-chain analytics firm.
Liquidation Breakdown
The recent price decline has predominantly affected long positions, with a staggering 90% of the liquidations stemming from traders who bet on rising prices. Specifically, over $266 million in long positions were liquidated, while short liquidations accounted for about $25.7 million. Other major cryptocurrencies have also felt the impact, with Ethereum (ETH) down 7%, Solana (SOL) dropping 6.2%, Dogecoin (DOGE) falling by 8.5%, and Cardano (ADA) down 8%. In contrast, XRP, the token associated with Ripple Labs, has bucked the trend by gaining 1.5%.
Causes of the Market Decline
The catalyst for this sudden market crash can be traced back to a sharp rise in U.S. Treasury yields, particularly over the past decade. The Institute for Supply Management (ISM) released a report today indicating that the Purchasing Managers’ Index (PMI) for December stood at 54.1, a notable increase from November’s figure of 52.1. This uptick in economic indicators has raised concerns about inflation, which has not only affected cryptocurrencies but also led to a downturn in U.S. equities.
In the midst of this turbulence, MicroStrategy (MSTR), recognized as the largest corporate holder of Bitcoin, experienced a significant price drop exceeding 10%. As the market continues to react to these economic signals, traders and investors are keeping a close watch on the developments, hoping for signs of recovery.
