Cryptocurrency Market Plunges: Bitcoin Crashes Below $97,000, Over 170,000 Liquidated, Losses Exceed $560 Million

Cryptocurrency Market Plunges: Bitcoin Crashes Below $97,000, Over 170,000 Liquidated, Losses Exceed $560 MillionThe cryptocurrency market experienced a dramatic price swing in the past 24 hours, with Bitcoin plummeting below the $97,000 mark, a decline of 4.69%

Cryptocurrency Market Plunges: Bitcoin Crashes Below $97,000, Over 170,000 Liquidated, Losses Exceed $560 Million

The cryptocurrency market experienced a dramatic price swing in the past 24 hours, with Bitcoin plummeting below the $97,000 mark, a decline of 4.69%. Concurrently, Ethereum fell nearly 8%, Dogecoin dropped over 10%, and a wave of market panic ensued. This sharp downturn resulted in over 170,000 liquidations, totaling more than $562 million (approximately 4.1 billion CNY), highlighting the severity of the market turmoil.

This significant cryptocurrency market downturn is closely linked to unexpectedly strong US service sector data. The Institute for Supply Management (ISM) reported that US service sector growth in December 2024 exceeded expectations, fueling concerns about "sticky inflation." This concern led to a rapid rise in 10-year US Treasury yields, which typically puts pressure on growth-oriented risk assets, triggering a sell-off in the cryptocurrency market.

Market analysis indicates that the cryptocurrency market's leverage is nearing levels seen at the peak of the 2021 bull market. This high-leverage environment makes the market extremely fragile, where any slight market movement can trigger panic selling, leading to a chain reaction of price crashes and liquidations. This recent crash is a direct reflection of this vulnerability.

The sharp decline in the cryptocurrency market also significantly impacted US blockchain-related stocks overnight. MicroStrategy and Canaan Inc. fell over 9%, Coinbase Global dropped over 8%, and Bitcoin Digital and The9 Limited declined by over 6%, further exacerbating the pessimistic market sentiment.

Looking back at 2024, Bitcoin's price saw an overall increase of over 120%. The news of Trump's election victory in November spurred a rapid price surge, pushing Bitcoin above $100,000 in early December, reaching an all-time high. However, from mid-to-late December, profit-taking by investors and expectations of a slower pace of Fed rate cuts led to a correction from these highs, with Bitcoin consolidating above $90,000 until a brief resurgence above $100,000 on January 6th.

Regarding Bitcoin's previous frenzied rally, Katie Stockton, a top Wall Street technical strategist, warned that the upward momentum was weakening and predicted a potential multi-week sell-off, with potential support levels around $84,500, or even as low as $73,800.

James Butterfill, Head of Research at CoinShares, a cryptocurrency asset management firm, predicted a 2025 Bitcoin price range of $80,000 to $150,000. He believes that a favorable US regulatory environment will be a key driver for Bitcoin's price, with a long-term target of $250,000. However, he also noted that this target is unlikely to be reached in 2025, and the lower end of the $80,000 range is predicated on the failure of Trump's pro-cryptocurrency policies. He suggests that disappointment and skepticism regarding Trump's crypto policies could trigger a significant market correction.

Federal Reserve Chairman Jerome Powell also discussed Bitcoin at the New York Times DealBook Summit. He stated that Bitcoin's competitor is gold, not the US dollar, describing Bitcoin as "digital gold." He argued that people don't use it as a payment or store of value instrument, citing its volatility as the reason Bitcoin isn't a competitor to the dollar but rather to gold.

Since its inception, Bitcoin has experienced dramatic price volatility, with sharp rises and falls becoming the norm. Yu Jianing, co-chair of the Blockchain Special Committee of the China Communications Industry Association, points out that Bitcoin's price fluctuations are influenced by several factors, including market sentiment, macroeconomic conditions, technological innovations, and regulatory policies. Governments' attitudes and policies toward cryptocurrencies are constantly evolving, with any new regulatory measures potentially having a significant impact on Bitcoin's price. Furthermore, global macroeconomic changes, such as interest rate fluctuations, inflation rates, and international trade relations, also affect the value of Bitcoin and other cryptocurrencies. Critically, cryptocurrency trading platforms and wallets still face risks such as hacking and security vulnerabilities, further exacerbating market volatility.

In conclusion, the recent significant cryptocurrency market downturn is the result of multiple interacting factors, including macroeconomic conditions and internal market factors such as high leverage and high risk. The future trajectory of the cryptocurrency market will remain subject to numerous uncertainties, and investors should exercise caution, invest rationally, and avoid blindly following trends.

Disclaimer: This content and data are for informational purposes only and do not constitute investment advice. Investors should make investment decisions based on their own circumstances and bear the associated risks. Any investment decision should be made after careful risk assessment and independent research. Do not blindly follow others' advice. Market volatility is significant; investing involves risk. Enter the market with caution. The information above is for reference only and does not constitute any investment advice.