The cryptocurrency market faced a sharp sell-off on January 7, losing $250 billion in value within 24 hours. Bitcoin (BTC), the leading cryptocurrency, dropped to $96,000 from $102,000, marking a significant fall.
Was it the latest economic data, market sentiment, or something else? In this article, we’ll break down the key reasons behind Bitcoin’s price dip and what it means for the broader crypto market moving forward.
Inflation Concerns
Bitcoin’s price dip coincided with a rise in the 10-year U.S. Treasury yield, driven by December’s stronger PMI data. The Institute for Supply Management reported a jump to 54.1, up from 52.1 in November, signaling unexpected growth in the U.S. services sector
This raised fears of inflation staying high, which could delay the Federal Reserve’s expected rate cuts. However, higher yields often hurt risky assets like cryptocurrencies.
Job Market Signals Weigh on Investor Sentiment
Adding to the uncertainty, the November JOLTS report showed an increase in job openings, though hiring slowed down. Worker confidence also fell, seen in the lower quit rate, which dropped to 1.9% from 2.1% in October. These mixed signals from the job market created further anxiety, contributing to the market’s downturn.
The market drop led to heavy liquidations, adding pressure on traders. In just one day, $561 million worth of long positions were liquidated. The largest liquidation came from Binance, with $17.74 million in ETHUSDT. Other cryptocurrencies were also affected, with Ethereum (ETH) losing over 8%, Solana (SOL) dropping more than 9%, and XRP falling by 5%.
The price drop also negatively affected Bitcoin ETF inflows. After two consecutive days of inflows, Bitcoin ETFs experienced outflows of $543.7 million on 7 January.
The biggest outflows came from companies like Ark Investment, Grayscale, Bitwise, and Fidelity, all of which had previously invested large amounts into Bitcoin ETFs.
According to Glassnode analyst James Check, Bitcoin’s sell pressure is easing, but fresh demand is also slowing. Spot trading volumes have dropped by 53% since November, showing reduced market activity.
However, if the market regains momentum, reaching $100,000 again remains a key target for traders. On the other hand, if Bitcoin fails to hold above the $95,668 support level the price could drop further to $93,625.
With support levels in play, all eyes are on Bitcoin’s next move—will it bounce back or fall further? It faces a major test ahead.
As per Coinpedia’s BTC price prediction, 1 BTC could peak at $169,046.
In 2030, the price of 1 Bitcoin could reach a height of $610,646.
Projecting a 10-year growth in a volatile asset like Bitcoin seems a far-stretched notion. The BTC price is expected to cross $600,000 by 2030. With global adoption, Bitcoin could be worth 1 million dollars.
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