Bitcoin, Tech Stocks Fall as Economic Strength Challenges Rate Cut Hopes

The crypto and traditional markets experienced significant declines on January 7, 2025, primarily driven by stronger-than-anticipated economic indicators that could delay anticipated Federal Reserve rate cuts.

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Bitcoin dropped to $96,909, marking an over 5% decline in the past 24 hours.

The sharp correction saw over $$483.44M in long positions liquidated within just 24 hours, according to Coinglass data. Other major cryptocurrencies followed suit, with Ethereum falling over 8%, and Solana declining over 7%.

The catalyst for today’s market movement came from two key economic reports. First, the Institute for Supply Management’s December PMI jumped to 54.1, surpassing November’s 52.1.

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On the other hand, where November’s JOLTS report showed higher-than-expected job openings, though hiring decreased compared to the previous month. The quit rate, which indicates worker confidence, fell to 1.9% from October’s 2.1%.

These economic indicators have led investors to recalibrate their rate-cut expectations, with traders now seeing less than a 50% chance of rate cuts before June. The Federal Reserve is widely expected to maintain current rates at its upcoming January meeting.

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