The crypto market dropped after Bitcoin immediately turned away from the $100,000 level following strong US economic data reports.

The cryptocurrency market took a hit today, with the total market capitalization dropping by around 6.3% to about $3.35 trillion on Jan. 8 as strong US economic data pointed toward potential interest rate hikes.

Let’s look closer at the factors driving the crypto market down today.

Bitcoin leads the market slump

Today’s crypto market decline is part of a correction that started during the early New York trading hours on Jan. 7 when Bitcoin BTC $93,467 lost the $100,000 level, as two stronger-than-expected US economic data prints quelled the early-year momentum by crypto assets. 

BTC price dropped as much as 6.35% to an intra-day low of $05,279 on Jan. 8. The decline in the pioneer cryptocurrency triggered panic selling among crypto investors, with prices dropping across the board.

Ether ETH $3,251.17 lost all the gains made over the last seven days, dipping as low as $3,300 on Jan. 8, recording 10% losses over the last 24 hours.

Other top-cap cryptocurrencies posting significant losses on Dec. 16 are Dogecoin DOGE $0.3269, Cardano ADA$0.9259  and Solana SOL $189.10, which are down 12%, 11.7% and 10%, respectively.

The sharp decline in prices liquidated nearly $631 million long positions across derivatives markets betting on rising prices, according to CoinGlass, marking the first large leverage flush of the year. Long BTC leveraged positions totaling $111 million were liquidated on the day.

A similar move was seen on Dec. 18 in the derivatives market when more than $844 million long positions were liquidated. These liquidations accompany a 12% drop in TOTAL—the combined market capitalization of all cryptocurrencies—with more than $1.2 billion being wiped off the crypto market.

A predominance of long liquidations suggests that the crypto market was overleveraged on the bullish side, primarily due to profit-taking and risk-off mode following strong US economic data.