The reassessment of expectations about possible Fed rate cuts in the face of solid economic data changed the outlook for risk assets in the short term.
Cryptocurrencies lose up to 12% this Wednesday, January 8, led by Cardano, Polkadot (11%), Hedera (-10.43%), SUI (-10.3%) and Chainlinkg (-10.3%). Bitcoin, for its part, lost more than 5.5% and is slightly above US$95,000, moving away from its all-time high.
This sudden crash caused liquidations worth US$300 million in leveraged positions that were betting on a price increase, according to data from CoinGlass, marking the first big sale of the year.
Among the causes of the regressionhighlights the stronger than expected economic data in the United States. For example, the JOLTS survey of job openings and the ISM services PMI both beat expectations, driving 10-year Treasury yields to 4.699%, their highest level since April. These figures also led markets to reevaluate their expectations about possible rate cuts by the Federal Reserve (Fed) in 2025.
According to 10x Research, “although BTC’s relationship with global liquidity is not strictly linear, the strengthening of the dollar and rising bond yields intensified pressures since the Fed’s December meeting.
Cryptocurrencies waiting for key data
Investors look forward to new economic data this week, like the December jobs report due out on Friday. In addition, today the minutes of the last Fed meeting will be known, where a more cautious stance on rate cuts was announced, limiting them to just two this year compared to the four planned in September.
The Fed’s more restrictive (‘hawkish’) stance, motivated by persistent inflation and a robust economy, could reduce the flow of capital into riskier assets like bitcoin and other cryptocurrencies. This is reflected in the decreasing probability of a rate cut in January and the reduction to 37% of a possible drop of 25 basis points in March.
Source: Ambito
