What to know:
- Dogecoin led crypto majors losses in the past 24 hours as bitcoin slid from above $102,000 to nearly $96,000.
- Crypto-tracked futures betting on higher prices took on $560 million in liquidations, data shows, setting a relatively high level at the start of the year.
- Singapore-based QCP Capital sticks to their view of a shaky period for crypto markets in January.
Among the major cryptocurrencies, Dogecoin (DOGE) experienced the most losses while Bitcoin (BTC) dipped close to $96,000. This decline was linked to recently released economic data causing U.S. treasury yields to surge sharply.
1 token, DOGE, dropped by 10%, and 4 others – Solana’s SOL, Cardano’s ADA, BNB Chain’s BNB, and ether (ETH) – each saw a decrease of at least 7%. Bitcoin dipped 5.5%, while the CoinDesk 20, which tracks the largest tokens by market cap, experienced a fall of 7.1%.
Data indicates that a substantial $560 million was liquidated from cryptocurrency-linked future bets on price increases at the beginning of the year, marking a notably high starting point.
Cryptocurrency losses mirrored those in U.S. equities. Notably, the Institute for Supply Management (ISM) report on U.S. service sector showed better-than-expected results, with the ‘prices-paid’ index recording its highest level since February 2023.
At the same time, U.S. job vacancies increased beyond expectations. This trend caused a drop in Treasury securities of different durations, which in turn pushed the 10-year Treasury rate to its peak since May.
A liquidation happens when an exchange compulsorily ends a trader’s leveraged deal because they can’t fulfill the margin conditions. When multiple traders are pushed to sell simultaneously due to long liquidations, it sets off a chain reaction where falling prices trigger additional liquidations, which subsequently cause prices to plummet even further.
As such, market watchers consider Tuesday’s drop to be a blip in the long term.
Yesterday saw a decline in markets as Bitcoin and Ethereum dropped significantly. This was largely due to robust U.S. job figures that lessened expectations for interest rate reductions this year, according to Vince Yang, CEO and cofounder of zkLink, in a Telegram message. This is a typical response we’ve seen before in the crypto market when broader sentiments change, nothing out of the ordinary.
Despite this setback, we remain hopeful. Historically, such downturns have usually preceded larger upward trends, particularly given our current position in the market cycle. Moreover, with a government likely to be more supportive of cryptocurrencies taking office in the U.S., there’s strong reason to anticipate some thrilling times ahead,” Yang concluded.
Despite being based in Singapore, QCP Capital maintains their stance that the crypto market may experience instability during January.
As an analyst, I’m sharing my perspective: The road ahead into January may not be straightforward due to potential structural challenges. Specifically, we anticipate that the U.S. Treasury debt ceiling will need to be reinstated around mid-month. This means that the Treasury might have to resort to “extraordinary measures” to finance government spending during this period.
“This could trigger market volatility as discussions around the issue intensify,” QCP added.
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2025-01-08 10:21