Plummet of Bitcoin: Massive Liquidations of $293 Millions due to Rising Yields of U.S. Treasury.

On January 8, 2025, the crypto market experienced strong bearish pressure, with significant falls in all digital assets. This situation has led to massive liquidations of long positions valued at hundreds of millions of dollars, highlighting the severe impact of market volatility on investors.

The Fall of Bitcoin

Bitcoin (BTC), the digital asset with the highest market capitalization, recorded a fall of over 5% in just a few hours. The price of Bitcoin plummeted from $102,060 to $95,865, triggering liquidations worth $293 million in just 4 hours, according to data provided by the Coinglass platform.

Of the total settlements recorded:

• $266.18 million corresponded to long positions.
• Only $25.7 million came from short positions.

The increasing trend of liquidations suggests that this price fall may not have reached its lowest point yet, increasing uncertainty among market operators.

Main Causes of the Fall of the Crypto Market

1. Significant Increase in U.S. Treasury Yields

The pronounced fall in the crypto market has its origin in the notable increase in the yields of 10-year U.S. Treasury bonds. This increase occurred following the release of economic data that was stronger than expected, directly affecting risk assets such as cryptocurrencies.

2. Purchasing Managers Index (PMI) of the Private Sector

The data from the Institute for Supply Management (ISM) showed that the private sector PMI for December was 54.1, an increase from the previous month which recorded 52.1.

• This figure indicates strong economic activity, intensifying concerns about inflation.
• The data caused falls in the U.S. equity markets, with shares of companies like MicroStrategy (MSTR) —which holds the largest Bitcoin reserves in the world— dropping more than 10%.

3. Concerns about U.S. Monetary Policy

Positive economic data reinforces expectations that the Federal Reserve may not ease its monetary policy in the short term. Investors are now reducing their projections for interest rate cuts in 2025, which negatively impacts speculative assets like crypto market.

Impact on Investors and Market

This situation serves as a warning for investors about the high risks in the crypto market, especially when faced with negative macroeconomic sentiment. The increase in liquidations in long positions also underscores the fragility of the market in the face of large fluctuations.

Analysts point out that the correlation between traditional markets and crypto assets intensifies during periods of economic turmoil, as previously observed in earlier crises. This dynamic reflects how macroeconomic factors now have a determining influence on the price behavior of Bitcoin and other cryptocurrencies.