Bitcoin Plunges Nearly 6% Amid Economic Data and Market Volatility

Bitcoin experienced significant volatility on January 7, 2025, with the price dropping almost 6% during the day. As of 8 PM GMT, Bitcoin traded at $96,180.15, down 5.97% from the previous close.

Data from multiple crypto news outlets and market analysts revealed the sudden downturn. The day began with Bitcoin trading above the $100,000 mark, reaching an intraday high of $102,700.

However, the cryptocurrency faced a sharp decline during U.S. trading hours. The drop coincided with the release of strong U.S. economic data from the Institute for Supply Management.

The ISM report showed better-than-expected growth in the services sector for December. This positive economic news led to a spike in Treasury yields. The 10-year Treasury yield rose by 1.7% to 4.70%.

Higher yields typically pressure risk assets like Bitcoin and tech stocks. The crypto market’s close correlation with traditional financial markets became evident.

Bitcoin Plunges Nearly 6% Amid Economic Data and Market Volatility. (Photo Internet reproduction)

The Nasdaq 100 index dropped by more than 1% to $19,635. Popular tech stocks also felt the impact. NVIDIA shares plunged by 5.4%, wiping out over $175 billion in market value.

Bitcoin’s Performance and Institutional Confidence

Despite the day’s losses, Bitcoin has risen by over 3% since the beginning of the year. The cryptocurrency remains on track for a remarkable 120% increase for 2024.

This long-term growth reflects increasing institutional interest and regulatory clarity. Interestingly, spot Bitcoin ETFs in the United States saw significant inflows despite the price drop.

On January 6, these ETFs recorded nearly $1 billion in inflows. This marked their highest inflow since November 21, totaling 9,577 BTC. Fidelity’s FBTC fund led the pack with an inflow of $370 million. BlackRock‘s IBIT followed closely with $209 million.

These substantial inflows suggest continued institutional confidence in Bitcoin’s long-term prospects. The sudden price drop triggered a wave of liquidations in the derivatives market.

CoinGlass data showed $249 million worth of long positions were wiped out in mere hours. This underscores the high-risk nature of leveraged crypto trading.

Analysts remain divided on Bitcoin’s short-term outlook. Some view the pullback as a healthy consolidation after recent gains. Others warn of potential further volatility due to macroeconomic factors.

The upcoming Federal Reserve minutes and nonfarm payrolls data could influence market sentiment. As Bitcoin navigates these choppy waters, investors should remain vigilant.

The cryptocurrency’s journey continues to reflect broader economic trends and evolving market dynamics. Its ability to maintain value above $95,000 despite the day’s turbulence demonstrates resilience in the face of short-term pressures.