Crypto markets faltered on Tuesday morning as stronger-than-expected U.S. economic data dampened hopes for near-term Federal Reserve rate cuts, pulling bitcoin (BTC) below the $100,000 mark.
The Bureau of Labor Statistics reported that November’s JOLTS job openings unexpectedly rose to 8.1 million from October’s 7.8 million, far surpassing analyst predictions of a decline to 7.7 million. At the same time, the ISM Services PMI, a key indicator of economic activity in the services sector, came in at 54.1 for December—beating expectations of 53.3 and November’s 52.1. The Prices Paid subindex surged to 64.4, significantly higher than the anticipated 57.5 and November’s 58.2.
Though these reports are not typically major market movers, their combined effect unsettled bond markets, driving the 10-year U.S. Treasury yield up five basis points to 4.68%, approaching multi-year highs. U.S. stocks reacted negatively, with the Nasdaq falling over 1% and the S&P 500 shedding 0.4% in late-morning trading.
Bitcoin, which had been holding steady near $101,000 during European trading hours, dropped sharply to $97,800 following the release of the data, reversing gains from the previous day and marking a 4% decline over 24 hours. Major altcoins saw even steeper declines: Ethereum (ETH) and Solana (SOL) fell by 6%-7%, while Avalanche (AVAX) and Chainlink (LINK) plummeted by 8%-9%.
The sell-off led to nearly $300 million in long-position liquidations across crypto derivatives markets, according to CoinGlass, making it the first significant leveraged washout of the year.
The robust economic data further eroded investor expectations for rate cuts in 2025. While a January rate cut was already considered unlikely, the probability of a March rate reduction fell to 37%, down from nearly 50% last week, according to the CME FedWatch tool. Similarly, the odds of a May cut dropped below 50%. Analysts at Ballinger Group estimate that markets are now pricing in only one 25 basis point rate cut for the entirety of 2025.
This renewed uncertainty highlights the challenges facing crypto markets as they contend with shifting macroeconomic conditions and a more hawkish outlook for monetary policy.
