TLDR
- Bitcoin dropped from $102,000 to $96,145 within 24 hours, marking a 5.7% decline
- The fall coincided with U.S. bond yields reaching an eight-month high of 4.685%
- Bitcoin ETF inflows plunged 94% to $52.9 million, down from $987 million the previous day
- Job openings rose unexpectedly to 8.098 million in November, suggesting continued economic strength
- BlackRock’s IBIT was the only Bitcoin ETF recording positive inflows ($596.11 million) while others saw outflows
Bitcoin experienced its second major price decline in less than a month, falling from $102,000 to $96,145 on January 7, 2025, as fresh economic data prompted investors to reassess their positions in cryptocurrency markets.
The price drop came as U.S. Treasury yields climbed to their highest levels since April 2024, with the benchmark 10-year yield rising 7.5 basis points to 4.685%. This increase in yields attracted investors to traditional government securities and away from riskier assets like cryptocurrencies.
The U.S. Labor Department’s latest report showed job openings rose by 259,000 to 8.098 million in November, reaching a six-month high. This figure exceeded economist expectations of 7.740 million and indicated continued strength in the labor market.
The unexpected strength in employment data has led market participants to adjust their expectations regarding Federal Reserve policy. While earlier projections suggested multiple interest rate cuts in 2025, current indicators point to fewer reductions than previously anticipated.
Bitcoin ETF markets reflected this shifting sentiment, with total inflows dropping to $52.9 million on January 7, down from $987 million the day before. This 94% decrease in inflows highlights how quickly investor enthusiasm can change in response to economic indicators.
Among the various Bitcoin ETF products, BlackRock’s IBIT stood out as the sole fund recording positive inflows, attracting $596.11 million in new investments. This inflow helped offset outflows from other funds in the market.
ARK and 21Shares’s ARKB experienced the largest outflows, with $212.55 million leaving the fund. Grayscale’s products also saw substantial withdrawals, with GBTC and BTC recording outflows of $125.45 million and $113.85 million respectively.
Fidelity’s FBTC reported an outflow of $86.29 million, while Franklin Templeton’s EZBC saw a smaller outflow of $5.58 million. Other Bitcoin ETFs in the market reported no flows during this period.
Despite the reduced inflows, daily trading volume for Bitcoin ETFs increased to $4.62 billion on January 7, up from $3.96 billion the previous day. This higher trading volume suggests active repositioning by market participants rather than simple market inaction.
The December ISM services index added to the economic picture, rising to 54.1 and exceeding the forecast of 53.5. This data point provided another indication of economic resilience, potentially supporting the case for fewer interest rate cuts.
The Federal Reserve has already indicated plans for approximately two interest rate cuts in 2025, fewer than market participants had hoped for earlier. The strength of recent economic data may further support this more measured approach to monetary policy.
Investors are now looking ahead to the Federal Reserve’s meeting minutes, scheduled for release on January 8, 2025. These minutes may provide additional insight into policymakers’ thinking about the timing and scale of potential rate cuts.
The upcoming nonfarm payroll report, due on Friday, represents another key piece of economic data that could influence market direction. A stronger-than-expected jobs report might reinforce expectations of delayed rate cuts.
The recent price movement has also impacted the broader cryptocurrency market, occurring alongside a larger market selloff that affected U.S. stocks. The combined market movements resulted in approximately $625 billion being wiped from U.S. stock valuations on the same day.
Traditional safe-haven assets have benefited from this market repositioning, with U.S. government bonds seeing increased demand as investors seek lower-risk alternatives in the current economic environment.
