Dogecoin (DOGE) led losses among major cryptocurrencies as bitcoin (BTC) fell to nearly $96,000, a drop attributed to new economic data that sent US Treasury yields soaring.
DOGE plunged 10%, with Solana’s SOL, Cardano’s ADA, BNB Chain’s BNB, and ether (ETH) falling at least 7%. Bitcoin fell 5.5%, while the 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 sell-off of $560 million, data shows, setting a relatively high level at the start of the year.
Losses in cryptocurrencies followed those in US stocks. The Institute for Supply Management’s (ISM) latest report on US service providers was stronger than expected, with the measure of prices paid reaching its highest point since early 2023.
At the same time, job openings in the United States increased more than expected. These developments led to a decline in Treasury securities across several maturities, pushing the 10-year Treasury yield to its highest level since May.
A liquidation occurs when an exchange forcibly closes a trader’s leveraged position due to the inability to meet margin requirements. When many traders are forced to sell at the same time due to prolonged liquidations, a cycle is created in which falling prices lead to more liquidations, which in turn causes prices to drop further.
Therefore, market observers consider Tuesday’s decline to be a temporary long-term blip.
“Markets took a hit yesterday, with Bitcoin and Ethereum falling hard, primarily because better-than-expected US jobs data dimmed hopes for more rate cuts this year,” shared Vince Yang, CEO and co-founder of zkLink in a Telegram message. “It’s the broadest kind of sentiment shift we’ve seen before, not at all unusual for cryptocurrencies.”
“That said, we remain optimistic. History shows that these dips often pave the way for larger bullish moves, especially where we are now in the market cycle and with the arrival of a more crypto-friendly administration in the US, There are many reasons to believe that we are headed towards something exciting. times to come,” Yang added.
However, Singapore-based QCP Capital maintains its view of an unstable period for crypto markets in January.
“Getting to January will not be easy as structural risks loom,” QCP said in a Telegram broadcast on Wednesday. “The U.S. Treasury’s debt ceiling reset is expected to be reset by mid-month, requiring the Treasury to take “extraordinary measures” to fund government spending.”
“This could trigger volatility in the market as discussions on the issue intensify,” QCP added.
