Why is the Crypto Market Down Today?
Today, January 7, 2024, prices across the cryptocurrency market dropped significantly, leading to the liquidation of longs worth hundreds of millions of dollars. Amid this market downturn, Bitcoin (BTC), the world’s largest digital asset by market capitalization, fell more than 5%.
$293 million in cryptocurrency liquidations
The sharp price drop saw BTC drop from $102,060 to $96,865 in just a few hours, leading to $293 million worth of liquidations in just four hours, according to the on-chain analytics firm coin glass. However, liquidation Continuing to rise suggests that the price decline may not stop here.
The data further shows that of the $293 million in liquidations, more than 90% came from long positions, with long liquidations worth $266.18 million and short liquidations worth $25.7 million.
In addition to BTC, the prices of Ethereum (ETH), Solana (SOL), Dogecoin (DOGE), and Cardano (ADA) fell by 7%, 6.2%, 8.5%, and 8% respectively. Meanwhile, Ripple Labs’ native token XRP appears to be bucking the trend, showing a 1.5% gain.
Reasons behind the cryptocurrency crash
You may be wondering why the cryptocurrency market suddenly collapsed. The reason is that U.S. Treasury yields have risen sharply over the past decade. Today, a report released by the Institute for Supply Management (ISM) highlighted that the private sector Purchasing Managers Index (PMI) was 54.1 in December, up from 52.1 in November.
This data not only affected the cryptocurrency market, but also caused the U.S. stock market to plunge due to inflation concerns. The price of MicroStrategy (MSTR), the world’s largest corporate Bitcoin holder, has fallen by more than 10% during this economic downturn.
