On January 7, 2024, the cryptocurrency market experienced a significant price decline, resulting in long liquidations worth hundreds of millions. Bitcoin has dropped by more than 5%.
$293 Million in Crypto Liquidations
This significant price decline brought Bitcoin down from $102,060 to $96,865 within mere hours, causing liquidations worth $293 million in just four hours, according to Coinglass. More than 90% of these liquidations came from long positions, while short liquidations amounted to $25.7 million. Besides Bitcoin, Ethereum, Solana, Dogecoin, and Cardano experienced price drops, whereas XRP displayed a 1.5% upward momentum.
Reason Behind the Crypto Crash
The main reason for the sudden crash is a sharp increase in U.S. Treasury yields. The Institute for Supply Management (ISM) released a report indicating the December Purchasing Managers’ Index was 54.1, higher than November’s 52.1. This not only impacted cryptocurrencies but also led to a decline in U.S. equities amid inflation concerns.
Reaction and Consequences
Amid the downturn, MicroStrategy, the world's largest corporate Bitcoin holder, saw a price decline of over 10%. Continued yield increases and economic reports have caused market uncertainty.
The crypto market downturn is influenced by macroeconomic factors like rising Treasury yields and inflation concerns. Its effects may be long-lasting if the economic situation continues to worsen.
