Why is the crypto market down today?
The crypto market dropped after Bitcoin immediately turned away from the $100,000 level following strong US economic data reports.
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$95,076 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$3,353.90 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$0.3469, Cardano ADA$0.9848 and Solana SOL$195.43, 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.
Strong US economic data triggers risk-off mode
The ongoing correction in the crypto market mirrors the weakness witnessed in US equities. The S&P 500 dropped by 1.1% to close the day at 5,509.03 on Jan. 7, while the Nasdaq composite index declined by 375 points.
The Dow Jones index clocked its second consecutive daily loss, dropping 0.61% to close the trading day on Jan. 7 at 42,528.36.
“The S&P 500 is now down 75 points today and has erased its year-to-date gain,” said capital markets commentator The Kobeissi Letter in response to the market’s reaction to the economic data prints.
“Over $625 billion of market cap has been erased from the stock market today.”
