Bitcoin Plunges Nearly $4,500, Wiping Out $400 Million in Crypto Liquidations as Dollar Breaks 110 and Tesla Shares Tumble

Bitcoin Plunges Nearly $4,500, Wiping Out $400 Million in Crypto Liquidations as Dollar Breaks 110 and Tesla Shares TumbleJanuary 13th witnessed a dramatic upheaval in global financial markets. Bitcoin experienced a "flash crash," plummeting nearly $4,500 within half a day, triggering significant volatility in the cryptocurrency market

Bitcoin Plunges Nearly $4,500, Wiping Out $400 Million in Crypto Liquidations as Dollar Breaks 110 and Tesla Shares Tumble

January 13th witnessed a dramatic upheaval in global financial markets. Bitcoin experienced a "flash crash," plummeting nearly $4,500 within half a day, triggering significant volatility in the cryptocurrency market. CoinGlass data revealed that nearly 170,000 traders were liquidated in the past 24 hours, resulting in total losses of $400 million. Simultaneously, the US dollar index surged past the 110 mark, and Tesla's pre-market share price saw a considerable drop, exceeding 3% at one point. These interconnected events contributed to a turbulent day in global finance.

Bitcoin's Flash Crash Inflicts Heavy Losses on Crypto Market

Bitcoin's drastic price swing was the central event of the market turmoil. The cryptocurrency fell nearly $4,500 in a matter of hours, a shocking decline. At press time, Bitcoin was trading at $91,500 per coin. This sudden downturn severely impacted Bitcoin holders and shook the entire cryptocurrency market.

Other cryptocurrencies also suffered significant losses. Ethereum fell over 4%, while Dogecoin dropped nearly 5%. This "panic selling" further amplified market instability. The near 170,000 liquidations totaling $400 million in the past 24 hours highlight the vulnerability of market participants to sharp price fluctuations.

Looking back at 2024, Bitcoin's price increased by over 120% overall. Following Trump's election victory in November, Bitcoin surged, exceeding $100,000 per coin in early December, reaching an all-time high. However, since mid-to-late December, profit-taking and expectations of a slower pace of Fed rate cuts led to a price correction, with Bitcoin trading around $90,000 before briefly surpassing $100,000 again on January 6th.

Wall Street's top technical strategist, Katie Stockton, previously warned against Bitcoin's sustained upward trajectory, predicting a multi-week sell-off, with potential support around $84,500 and a possible further drop to $73,800. Despite this, she remained optimistic about Bitcoin's long-term prospects, viewing the short-term correction as a buying opportunity. Overall, institutional investors maintain a relatively positive outlook on Bitcoin's long-term performance.

Dollar Index Breaks 110, Fed Monetary Policy Crucial

The US dollar index's continued climb, exceeding 110 at press time, heightened global market anxieties. Friday's strong non-farm payroll report significantly boosted the dollar. Goldman Sachs, in a report, cited the robust US economy and anticipated inflationary pressure from tariffs as reasons for a potential slowdown in the Fed's easing of monetary policy.

Goldman Sachs strategists, including Kamakshya Trivedi, predicted a roughly 5% increase in the dollar over the next year, driven by new tariffs and sustained US economic growth. Even after this upward revision, Goldman sees further upside risk for the dollar. This marks the second upward revision to Goldman's dollar forecast in just two months, reflecting widespread market expectations.

The US economy's continued strength and anticipation of inflation fueled by President-elect Trump's planned tariffs have eroded confidence in further Fed rate cuts. The Fed's future monetary policy will significantly impact the dollar's trajectory and global financial markets.

Tesla Pre-Market Plunge Follows ABP's $585 Million Stock Dump

Tesla's pre-market share price experienced a sharp decline, exceeding 3% at its lowest point. Reports revealed that ABP, Europe's largest pension fund, completely liquidated its Tesla holdings in the third quarter of last year, worth approximately 5.71 billion (around $5.85 billion). ABP cited disagreements over Musk's compensation package as a contributing factor.

An ABP spokesperson stated their objections to Musk's remuneration, considering cost, return, and responsible investing in their decision. In June, ABP voted against Musk's compensation plan, deeming it "controversial and excessive," despite its eventual approval by Tesla shareholders.

ABP emphasized that the liquidation wasn't a bearish bet on Tesla's future but rather a strategic long-term investment decision, unrelated to Musk's role in US politics.

It's noteworthy that last month, Musk's record-breaking Tesla compensation package was again rejected by a Delaware judge. Delaware Chancery Court Judge Kathaleen St. J. McCormick upheld her January 2024 ruling, finding that Tesla's board was unduly influenced by Musk when approving his 2018 compensation plan, initially valued at $2.6 billion but rising to $56 billion before its cancellation.

Summary

January 13th saw intense volatility in global financial markets. Bitcoin's crash, the dollar's surge, and Tesla's stock fluctuations combined to create a turbulent market environment. These events are interconnected, reflecting numerous uncertainties in the global economy and financial markets. Bitcoin's short-term outlook is challenging, but long-term optimism persists. The strong dollar is closely tied to Fed monetary policy, while Tesla's stock price is linked to management and investor confidence. These events underscore the need for caution, market awareness, and rational decision-making in investing.

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