Bitcoin and technology stocks fall as hopes decline due to economic strength challenges

Cryptocurrency and traditional markets saw significant declines on January 7, 2025, driven primarily by stronger-than-expected economic indicators that could delay expected interest rate cuts from the Federal Reserve.

Bitcoin fell to $96,909, registering a decline of more than 5% over the past 24 hours.

The sharp correction saw over $483.44 million worth of long positions liquidated in just 24 hours, according to Coinglass data. Other major cryptocurrencies followed suit, with Ethereum falling more than 8%, and Solana stock falling more than 7%.

The impetus for today’s market action came from two major economic reports. First, the Institute for Supply Management’s Purchasing Managers’ Index (PMI) for December jump to 54.1, surpassing 52.1 in November.

On the other hand, the JOLTS report for November showed higher than expected employment opportunities, although employment decreased compared to the previous month. The smoking cessation rate, which indicates worker confidence, fell to 1.9% from 2.1% in October.

These economic indicators have prompted investors to reset their expectations for interest rate cuts, with traders now seeing less than a 50% chance of a rate cut before June. The Fed is widely expected to maintain current interest rates at its next meeting in January.

The stock market reflected these concerns, with the S&P 500 falling 1.1% and the Nasdaq Composite falling 1.9%. Nvidia shares fell 6.2% despite CEO Jensen Huang announcing new AI initiatives at CES.