Original | Odaily Planet Daily

Author | Nanzi

After briefly rising above $100,000 on January 7, the market has plummeted, with Bitcoin leading the crypto market in a broad decline. Last night at 10pm, Bitcoin plunged below 90,000 USDT, hitting a low of 89,256 USDT.

At the same time, Ethereum 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 10pm 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 at $586 million. In terms of currencies, BTC had $165 million in liquidations, while ETH had the highest 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%, fundamentally due to the much stronger-than-expected non-farm payroll data, supporting the Fed's slower pace of rate cuts.

The non-farm payroll data released on January 10 showed that the seasonally adjusted non-farm employment in the US in December was 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 increasingly expects 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 risk markets.

DXY US 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 payroll), the probability of a cumulative 25 basis point rate cut is 25.4% (37.9% before the non-farm payroll), and the probability of a cumulative 50 basis point rate cut is 0.6% (2.5% before the non-farm payroll).

According to Jinshi, 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) bond yields and making investors more convinced that the Fed's room for rate cuts may not be as large as previously expected.

Brandywine Global portfolio manager Jack Mcintyre 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 21:30 this Wednesday.)

Institutional Views

Bitfinex: Optimistic sentiment on crypto regulation may limit further Bitcoin declines

Bitfinex released a report analyzing that the reason for Bitcoin's decline is the increasingly cautious sentiment in the market, driven by the surge in US Treasury yields and the continued outflow of spot Bitcoin 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 macroeconomic pressures, Bitcoin 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 a tightening financial environment, Bitcoin may face greater volatility in the short term. However, the optimistic sentiment on crypto regulation under the new US president-elect Trump may limit further declines in Bitcoin and keep it in a strong position in the long run.

Analyst: Bitcoin's "January selloff" is a common phenomenon, and new highs may emerge after a major correction

Crypto analyst Axel Bitblaze said that historically, Bitcoin 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, the year after the 2016 halving, Bitcoin plummeted 30% from $1,130 to $784. That year, Bitcoin price soared 2,400% to a record high of $20,000 in December.

2. In January 2021, the latest year after the halving, Bitcoin price fell over 25% from over $40,000 to slightly above $30,000 by the end of the month. By November, Bitcoin price had surged 130% to a record high of $69,000.

Senior FX Analyst at Intouch Capital Markets: BTC has bearish technical signals, next support may be around $88,000

Piotr Matys, senior FX analyst at Intouch Capital Markets, said Bitcoin may have formed a so-called head and shoulders pattern, indicating a shift from a bullish to a bearish trend. Matys said the break below the $91,600 level, seen as a major support, indicates "Bitcoin has strong bearish technical signals". FxPro chief market analyst Alex Kuptsikevich added that if the bearish sentiment prevails, Bitcoin's next support level may be around $88,000, and it could quickly rebound to around $74,000.

Last year, the debut of US ETFs directly linked to Bitcoin, as well as the president-elect Trump's outspoken support for the digital asset industry, propelled Bitcoin to new highs. However, this optimism has somewhat waned 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 Bitcoin's short-term correction

Bloomberg senior ETF analyst Eric Balchunas said Bitcoin'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 everything he can to keep the stock market rising, so he is not too concerned about these short-term corrections.

The future is bright, the road is winding

Although Bitcoin and Ethereum ETFs have recently started to see net outflows, MicroStrategy is still "buying, buying, buying". Yesterday, MicroStrategy announced that it had purchased an additional 2,530 BTC for $243 million. Meanwhile, Nasdaq-listed companies like Heritage Distilling and Nano Labs are also planning to hold Bitcoin as strategic reserves, and more large-scale buying may still be on the way.

On the other hand, the path of rate cuts in the first half of the year now seems set in stone based on market forecasts, and the bearish expectations have already been priced in. On January 20, Trump will be sworn in as President of the United States, and his policy direction and final implementation will be the key factors influencing the crypto market's trajectory.