Traditional and cryptocurrency markets saw significant declines on January 7, 2025, driven primarily by stronger-than-expected economic indicators that could delay the Federal Reserve’s planned rate cuts.
Bitcoin fell to $96,909, which is a drop of more than 5% in the last 24 hours.
The sharp correction caused the liquidation of more than $483.44 million in long positions in just 24 hours, according to data from Coinglass. Other major cryptocurrencies followed suit, with Ethereum falling more than 8% and Solana falling more than 7%.
The catalyst for the current market move came from two key economic reports. First, the Institute for Supply Management’s December PMI jumped to 54.1, up from 52.1 in November.
On the other hand, the November JOLTS report showed higher-than-expected job openings, although hiring decreased compared to the previous month. The resignation rate, which indicates worker confidence, fell to 1.9% from 2.1% in October.
These economic indicators have led investors to recalibrate their rate cut expectations, with traders now seeing a less than 50% chance of rate cuts before June. The Federal Reserve is widely expected to maintain current rates at its next meeting in January.
The stock market reflected these concerns, with the S&P 500 falling 1.1% and the Nasdaq Composite falling 1.9%. Nvidia shares fell 6.2% despite CEO Jensen Huang’s announcement of new AI initiatives at CES.