Dogecoin suffered significant losses over the last 24 hours as Bitcoin tumbled from $102,000 to nearly $96,000. The drop, triggered by fresh U.S. economic data that pushed Treasury yields to new highs, also led to $560 million in liquidations of crypto-tracked futures.
Dogecoin (DOGE) plummeted by 10%, with other major cryptocurrencies such as Solana’s SOL, Cardano’s ADA, BNB Chain’s BNB, and Ether (ETH) recording losses of at least 7%. Bitcoin itself fell 5.5%, while the CoinDesk 20 Index, which tracks the largest tokens by market cap, declined by 7.1%.
These losses coincided with a stronger-than-expected U.S. job report from the Institute for Supply Management (ISM), which also indicated that the prices-paid measure had reached its highest point since early 2023. Additionally, U.S. job openings exceeded forecasts, resulting in a broader sell-off in Treasury securities. The 10-year Treasury yield reached levels unseen since May.
The liquidations, primarily from leveraged long positions, created a cascading effect of forced sales, further driving prices downward. When traders fail to meet margin requirements, exchanges forcibly close their positions, causing a ripple effect in already volatile markets.
Market participants, however, remained divided on the implications of the drop. Vince Yang, CEO and co-founder of zkLink, noted that this kind of market shift isn’t out of the ordinary for crypto. He shared in a Telegram message, “Markets took a hit yesterday, with Bitcoin and Ethereum dropping hard, mostly because stronger-than-expected U.S. job data dimmed hopes for more rate cuts this year. It’s the kind of broader sentiment shift we’ve seen before, nothing unusual for crypto.”
Yang also expressed optimism about the market’s trajectory, emphasizing that these downturns often serve as precursors to stronger bullish movements. “History shows these dips often pave the way for bigger bullish movements, especially with where we are in the market cycle now. With a more crypto-friendly administration in the U.S. coming in, there’s every reason to believe we’re heading for some exciting times ahead,” he added.
However, not all experts share Yang’s optimism. Singapore-based QCP Capital maintained a cautious outlook, suggesting that January could bring further instability. “It won’t be smooth sailing into January, as structural risks loom,” the firm stated in a Telegram broadcast. They pointed to the U.S. Treasury debt ceiling reinstatement, expected mid-month, which would force the Treasury to adopt “extraordinary measures” to fund government expenditures.
According to QCP, this situation could amplify market volatility as debates around the issue intensify, potentially impacting investor sentiment and market performance.
While the immediate outlook for the crypto market appears uncertain, these moments of volatility often serve as critical junctures for long-term investors to recalibrate and anticipate future trends. Whether the current downturn is a mere blip or the beginning of a larger correction remains to be seen, but history suggests that such periods of turbulence often lay the groundwork for future opportunities.