Bitcoin drops below $98K, $300 million 'evaporates' as US economic data shakes the market

The cryptocurrency market is in turmoil as Bitcoin (BTC) lost the $100,000 mark on Tuesday morning in the US when stronger-than-expected US economic data poured cold water on the bright early-year growth momentum of digital assets. The number of jobs according to JOLTS from the Bureau of Labor Statistics in November unexpectedly increased to 8.1 million from the previous month's 7.8 million, easily surpassing analysts' estimate of a decrease to 7.7 million. Simultaneously announced, the ISM Purchasing Managers' Index, a monthly measure of economic activity in the service sector, reached 54.1 in December, exceeding expectations of 53.3 and significantly higher than the 52.1 level in November. The Prices Paid Index reached a record high of 64.4, compared to the expected level of 57.5 and 58.2 in the previous month. Although neither of these reports tends to have much impact on the market, when combined, they have shaken an already unstable bond market, causing the yield on the 10-year US Treasury bond to rise by another five basis points to 4.68%, just shy of its highest level in several years. This move has led to a decline in US stocks, with the Nasdaq down over 1% at the end of the morning trading session and the S&P 500 down 0.4%. BTC, traded just below $101,000 in the afternoon hours in Europe, dropped to $97,800 after the data, giving up yesterday's gains and falling 4% in the past 24 hours. The major altcoins even saw bigger declines with Ethereum's ether (ETH) and Solana's SOL losing 6%-7%, while Avalanche's AVAX and Chainlink's LINK dropped 8%-9%. According to CoinGlass, the rapid decline in prices has liquidated nearly 300 million dollars of long positions in the derivatives markets betting on price increases, marking the first major leverage increase of the year.

This strong data also continues to lower investor expectations of interest rate cuts in 2025. While market participants eliminated all possibilities of interest rate cuts at the January Fed meeting, they now only see a 37% chance of easing at the central bank's March meeting, down from nearly 50% just a week ago, according to the CME FedWatch tool. Looking further out, the rate of interest rate cuts in May is also much lower than 50%. Looking at the entire 2025, Kyle Chapman of Ballinger Group notes that investors currently only indicate a price of about one rate cut of 25 basis points for the entire year.