Dogecoin Leads Crypto Losses as Bitcoin Drops to $96K, $560M Long Positions Liquidated
Dogecoin (DOGE) suffered the largest losses among the main cryptocurrencies, while Bitcoin (BTC) dropped 10% below $96,000. A significant sell-off in leveraged cryptocurrency holdings followed the release of new economic data that caused U.S. Treasury rates to reach their highest levels since May.
Why the Drop
The crypto market’s decline was exacerbated by better-than-expected U.S. economic data. In addition to U.S. jobs exceeding forecasts, the Institute for Supply Management’s (ISM) study on U.S. services demonstrated resiliency. A sell-off in Treasury securities resulted from these events, which caused the yield on the 10-year Treasury note to spike higher.
Traders were compelled to sell their assets in order to pay margin calls, which caused a wave of liquidations in leveraged positions in the cryptocurrency market. A feedback loop was therefore produced, pushing prices lower and leading to further forced selling.
Market Outlook: A Temporary Setback?
Despite the steep decline, market analysts think this is only a temporary setback. According to zkLink CEO Vince Yang, the decline was brought on by a shift in the general mood of the market, particularly with reference to US. economic data that dimmed hopes for more rate cuts in the near future.
“History shows these dips often pave the way for bigger bullish movements, especially with where we are in the market cycle now,” Yang said, adding that the upcoming crypto-friendly administration in the U.S. could boost the sector in the longer run.
QCP Capital’s Cautious View
However, trading company QCP Capital, based in Singapore, is still wary. They cite the mid-January restoration of the US Treasury debt ceiling as a possible risk that could cause market volatility since it might force the government to take “extraordinary measures” to cover its spending.
QCP issued a warning in a recent update, saying, “The road into January will not be easy as structural risks are looming.”
Conclusion
Experts continue to dispute whether the current market turbulence is a temporary correction or a sign of upcoming instability. February could be a challenging month for cryptocurrency traders due to underlying issues and potential legislative changes in the United States. A few, however, still see the current slump as an opportunity to make more money in the months to come.
