Original | Odaily (@OdailyChina)
Author | Nanzi (@Assassin_Malvo)
After briefly rising above $100,000 on January 7, the market has plummeted, with Bit leading the entire crypto market to decline. At 10 pm last night, Bit plunged below 90,000 USDT, hitting a low of 89,256 USDT.
At the same time, ETH fell below 3,000 USDT, hitting 2,920 USDT; SOL fell below 170 USDT, hitting 168.8 USDT.
The total cryptocurrency market cap has also fallen sharply, with CoinGecko data showing that the total market cap was $3.27 trillion at 10 pm last night, down about 13% from January 7.
In terms of derivatives trading, Coinglass data shows that $804 million was liquidated across the network in the past 24 hours, with long positions accounting for a larger proportion of the liquidations, reaching $586 million. In terms of currencies, BTC had $165 million in liquidations, while ETH had the highest liquidations at $205 million.
Why the sharp decline?
In fact, in addition to the crypto market, major financial markets have also seen a broad pullback recently, with the Nasdaq index falling 4.15% over the past 5 trading days and the Nikkei falling 2.8% over 5 trading days, with the fundamental reason being that the non-farm data significantly exceeded expectations, supporting the Fed's slower pace of rate cuts.
The non-farm data released on January 10 showed that the seasonally adjusted non-farm payrolls in the US in December were 256,000, significantly exceeding the market expectation of 160,000, reaching a new high since March 2024. The unemployment rate was 4.1%, compared to 4.2% in November. The market is increasingly expecting the Fed to only make a small rate cut in 2025, and the DXY dollar index has risen accordingly, leading to a general decline in the risk market.
DXY Dollar Index
How about the rate cut expectations?
On January 10, according to the CME "Fed Watch", the probability of the Fed keeping rates unchanged in January is 97.3%, and the probability of a 25 basis point rate cut is 2.7%. By March, the probability of keeping the current rate unchanged is 74.0% (59.6% before the non-farm), the probability of a cumulative 25 basis point rate cut is 25.4% (37.9% before the non-farm), and the probability of a cumulative 50 basis point rate cut is 0.6% (2.5% before the non-farm).
According to the Golden Ten report, US interest rate futures pricing suggests the Fed may not cut rates this year. Traders are increasingly betting that the Fed will not cut rates from the current 4.25-4.50% range, which has in turn boosted the exchange rate of the US dollar against most other major currencies. Against the backdrop of rising inflation and borrowing costs, US Treasuries have been sold off this month, pushing up (10-year) government bond yields and making investors more convinced that the Fed's room for rate cuts may not be as large as previously expected.
Jack Mcintyre, a portfolio manager at Brandywine Global, said that the key variable for both the Fed and the market is still inflation. Next week's CPI data will be more important. (Note: CPI will be released at 9:30 pm this Wednesday.)
Institutional Views
Bitfinex: Optimistic sentiment on crypto regulation may limit further declines in Bit
Bitfinex released a report analyzing that the reason for Bit's decline is the increasingly cautious sentiment in the market, driven by the surge in US Treasury yields and the continued outflow of spot Bit ETFs. It is worth noting that ETFs have seen 7 days of outflows in the past 12 trading days, with $718 million flowing out in just two days, in stark contrast to the nearly $2 billion inflow at the beginning of January.
Despite the macroeconomic pressure, Bit remains resilient - up 42% since the US election - outperforming stocks, which have erased their post-election gains. However, with the Fed signaling fewer rate cuts and tighter financial conditions, Bit may face greater volatility in the short term. However, the optimistic sentiment on crypto regulation under the new US president-elect Trump may still limit further declines in Bit and keep Bit in a strong position in the long run.
Analyst: Bit's "January selloff" is a common phenomenon, and new highs may emerge after a major correction
Crypto analyst Axel Bitblaze said that historically, Bit selloffs in January are a common phenomenon in the years following the halving, and cited examples of 2017 and 2021 where the market reached new highs after the selloffs:
1. In January 2017, one year after the 2016 halving, Bit plummeted 30% from $1,130 to $784. That year, Bit price soared 2,400% to a record high of $20,000 in December.
2. In January 2021, the latest year after the halving, Bit price fell over 25% from over $40,000 to slightly above $30,000 by the end of the month. By November, Bit price had soared 130% to a record high of $69,000.
Senior FX Analyst at Intouch Capital Markets: BTC has technical bearish signals, next low point may be around $88,000
Senior FX Analyst at Intouch Capital Markets piotr matys said that Bit may have formed a so-called head and shoulders pattern, indicating a shift from a bullish to a bearish trend. Matys said that the break below the $91,600 level seen as a major support "indicates Bit has strong technical bearish signals". FxPro's Chief Market Analyst Alex Kuptsikevich added that if the bearish sentiment prevails, Bit's next low point may be around $88,000, and it could also quickly rebound to around $74,000.
Last year, the debut of US ETFs directly linked to Bit, as well as the president-elect Trump's outspoken support for the digital asset industry, propelled Bit to new highs. However, this optimism has waned somewhat in 2025, with some analysts saying traders are waiting for certainty after Trump's inauguration on January 20.
Bloomberg Analyst: Trump will revive US stocks, not worried about Bit's short-term correction
Bloomberg senior ETF analyst Eric Balchunas said that Bit's biggest risk is a downward trend in the stock market (also known as the "baby boomer market"), which has both pros and cons. The good news is that Trump is likely to do his utmost to keep the stock market rising, so he is not too concerned about these short-term corrections.
The future is bright, the path is winding
Although BTC and ETH ETFs have recently started to see net outflows, MicroStrategy is still "buying, buying, buying". Yesterday, MicroStrategy announced again that it had purchased an additional 2,530 BTC for $243 million. At the same time, Nasdaq-listed companies Heritage Distilling, Nano Labs, and others are also planning to hold BTC as a strategic reserve, and more large-scale buying may still be on the way.
On the other hand, the path of interest rate cuts in the first half of the year has been nailed down from the market's forecast, and the bearish expectations have been digested. On January 20, Trump will be sworn in as the President of the United States, and his policy orientation and the final implementation will become the most critical factors affecting the trend of the crypto market.