Bitcoin, the world’s largest cryptocurrency, erased almost all its early 2025 gains on Wednesday, as global macroeconomic jitters triggered a sharp selloff. BTC hit a session low of $92,600 during U.S. trading hours, marking a nearly 10% drop in two days from Monday’s peak above $102,000. It later recovered slightly to $94,300, down 2.5% over the past 24 hours.
Other major cryptocurrencies also suffered significant losses. Cardano (ADA), Render (RNDR), and Aptos (APT) were the biggest losers. which fell over 3% during the same period.
The two-day drop liquidated nearly $1 billion in leveraged derivatives positions across crypto markets, predominantly affecting traders who bet on higher prices.
Crypto Stocks Hit Hard
The broader crypto market turmoil extended to related stocks. Major Bitcoin mining companies like TeraWulf (WULF), Bit Digital (BTBT), Bitdeer (BTDR), IREN, and Hut 8 (HUT) saw declines of 5%-8%.
Semler Scientific (SMLR), a medical devices firm that adopted a Bitcoin treasury strategy, experienced a sharp 10% drop on Wednesday and is now down 15% for the week, with its stock price plummeting nearly 40% from its late December highs. MicroStrategy (MSTR), a well-known BTC holder, was down 2.2% for the day.
Macro Pressures Weigh on Crypto
The selloff was exacerbated by strong U.S. economic data, rising government bond yields, and lingering inflation concerns. Investors reacted to Tuesday’s robust economic indicators, which dampened expectations for interest rate cuts in 2025.
Uncertainty surrounding President-elect Donald Trump’s tariff policies also contributed to market jitters. Minutes from the Federal Reserve’s latest policy meeting, released Wednesday, revealed concerns about upside inflation risks and potential impacts of new tariffs.
Fed Governor Christopher J. Waller expressed support for additional interest rate cuts through the year to ease fears of inflation, but this did little to alter investor sentiment.
Analysts Predict Bitcoin Bounce
Despite the recent downturn, analysts expect Bitcoin to see a short-term bounce. BTC returned to the lower bound of its trading range, which has held since late November. Cross-asset trader Bob Loukas, founder of Station3 NYC, suggested Bitcoin (BTC) may consolidate within this range before pushing to new all-time highs.
“Doesn’t have to be uber bearish, but we might need to fiddle around in a range and get more comfortable with $100k prints before we can really leave this area behind,” Loukas said in a post on X.
This is just Day 8 of the Bitcoin 60-day cycle, and working on the first red candle of cycle. Nothing unusual. Too early for sustained weakness, so think we bounce off 10dma.
The issue is on Weekly Cycle, don’t think we’ve seen enough of a sentiment clearing process. Doesn’t… pic.twitter.com/PDO30jtTyG
— Bob Loukas 🗽 (@BobLoukas) January 7, 2025
Market anticipation is building ahead of key events, including Friday’s U.S. non-farm payrolls report and the Federal Reserve meeting later this month. Hedge fund QCP Capital predicts Bitcoin’s pullback is temporary, setting the stage for a bullish rally as Trump’s January 20 inauguration approaches.
“With market anticipation building, we believe Bitcoin’s pullback is merely a pause, setting the stage for a bullish rally as Trump’s inauguration fuels optimism,” QCP analysts noted in a Telegram broadcast.
Bitcoin’s dip below $93,000 underscores the cryptocurrency market’s sensitivity to macroeconomic factors and investor sentiment. While analysts remain optimistic about a near-term recovery, traders should brace for potential volatility amid upcoming economic data releases and political developments.
Related topic: Bitcoin price hits $100K but why are traders cautious?
Dogecoin Slumps 10% Amid Bitcoin’s Slide to $96K, $560M Liquidated in Long Positions
Dogecoin (DOGE) suffered a significant 10% drop over the past 24 hours as Bitcoin (BTC) tumbled from above $102,000 to nearly $96,000. This decline is attributed to stronger-than-expected U.S. economic data, pushing U.S. Treasury yields to their highest since May and leading to widespread liquidations in crypto markets.
Key Highlights:
- Market-Wide Crypto Losses:
- Massive Liquidations:
- Crypto futures betting on higher prices saw liquidations amounting to $560 million, signaling a challenging start to 2025 for leveraged traders.
- A cycle of forced selling contributed to further price drops across the market.
- Macroeconomic Pressure:
- The U.S. Institute for Supply Management (ISM) reported robust service sector data, including a surge in the prices-paid measure, reaching its highest level since early 2023.
- Additionally, U.S. job openings surpassed expectations, further fueling concerns about prolonged high interest rates and impacting both stock and crypto markets.
- Expert Insights on Market Trends:
- Vince Yang, CEO of zkLink, remarked, “Stronger-than-expected U.S. job data has dimmed hopes for more rate cuts this year. However, history shows that such dips often pave the way for bullish movements, especially given where we are in the crypto market cycle.”
- Yang expressed optimism for the future, citing a potentially more crypto-friendly U.S. administration as a positive factor.
- January Volatility Predicted:
- Singapore-based QCP Capital remains cautious, warning of structural risks in January.
- They highlighted the upcoming U.S. Treasury debt ceiling reinstatement mid-month as a potential source of volatility, with extraordinary measures needed to fund government operations.
While Tuesday’s drop reflects broader macroeconomic pressures, market watchers maintain that such downturns are not unusual for crypto markets. Analysts believe these corrections often lay the groundwork for stronger bullish rallies.
With a mix of cautious and optimistic outlooks, the crypto market is expected to navigate a volatile January, driven by macroeconomic events and structural risks.
Despite the recent slump, historical trends and a potentially favorable policy environment offer hope for a market recovery. Investors should remain vigilant, focusing on long-term trends while preparing for short-term volatility.
Solana Accelerates Firedancer Testing to Boost Transaction Speed
Solana, one of the world’s leading blockchains, is ramping up testing for Firedancer, a groundbreaking software upgrade designed to massively enhance transaction throughput.
According to an announcement on Solana’s technical Discord server, the blockchain’s core development team aims to achieve a “super majority” of processing power on its low-risk test network (testnet) running Frankendancer, an early version of Firedancer, by the end of this week.
Firedancer, developed by Jump Crypto since 2022, promises to give Solana a significant edge in the race to onboard global financial markets onto blockchain systems. Theoretically, the software can process up to 1 million transactions per second, far surpassing any current blockchain technology.
Frankendancer: A Milestone in Firedancer’s Roadmap
Currently, Jump Crypto has only launched Frankendancer, a hybrid version combining elements of Firedancer and Solana’s existing client architecture. However, early implementation has been challenging, with many validators reporting bugs and instability.
“It’s been notoriously difficult to keep it alive and running, but we’ve done it,” said Kollen House, a long-time member of Solana’s validator community. He views the push to require “60% of the testnet” to run Frankendancer as a sign of the software’s growing maturity.
At present, around 30% of validators on the testnet have switched to Frankendancer. The Solana Foundation is now leveraging a “carrot-and-stick” strategy by threatening to revoke delegated stakes from validators who fail to update their software.
Benefits and Challenges of the Firedancer Upgrade
Blockchain networks like Solana are powered by hundreds of independent validators, each running “client” software to connect to the network. This decentralization enhances security but complicates system-wide upgrades.
To address this, the Solana Foundation has introduced a “delegation program” to support smaller validators with limited profits. For the first time on Jan. 8, 2025, the organization used this program to directly encourage the adoption of Frankendancer.
The testing of Firedancer marks a critical step in Solana’s development roadmap. If successful, this upgrade will not only boost transaction speed but also position Solana as the top blockchain platform supporting global financial markets. However, challenges remain, as a “super majority” of validators must transition to the new software before the deadline set by the Solana Foundation.
