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