Bitcoin suffered a sharp reversal on January 7, 2025, plunging below the psychologically critical $100,000 mark after briefly reclaiming $102,000 earlier in the session. The sudden sell-off, triggered by stronger-than-expected U.S. economic data, wiped out nearly $622 million in leveraged positions and raised fresh questions about the sustainability of Bitcoin’s post-election rally.
TL;DR
- Bitcoin dropped 5% to approximately $97,000, falling below $100,000 for the first time in weeks
- $205 million in futures liquidated in a single hour; $622 million total over 24 hours
- ISM Services PMI surged to 54.1 in December, beating expectations and signaling economic strength
- Stronger jobs data and rising Treasury yields crushed hopes for near-term Fed rate cuts
- Trump election excitement is mostly priced in, according to Columbia University professor
The Morning That Changed Everything
Bitcoin had been showing signs of renewed strength, trading above $101,000 in the early hours of January 7 as the market appeared ready to mount another assault on its all-time high of $108,000, reached on December 17, 2024. But the optimism evaporated quickly after the Institute for Supply Management released its December Services PMI reading of 54.1 — a significant jump from November’s 52.1 and well above market expectations.
The data signaled that the U.S. services sector, which accounts for the vast majority of economic activity, was expanding at an accelerating pace. While that sounds like good news for the broader economy, it was terrible news for risk assets. A stronger economy means the Federal Reserve has less incentive to cut interest rates, and the 10-year Treasury yield surged in response. Bitcoin, which had been riding the wave of Fed rate cut expectations since the September 2024 pivot, immediately came under selling pressure.
The Liquidation Avalanche
The speed and severity of the sell-off caught many traders off guard. Crypto exchanges liquidated $205 million worth of open futures positions within a single hour as Bitcoin’s price cratered. Over the full 24-hour period, the damage was even more staggering: CoinGlass data showed that 201,983 traders were liquidated, with combined losses totaling $622.22 million.
Ethereum suffered an even steeper decline, dropping 9.1% in the daily charts. XRP fell 4.5%, while Dogecoin led the major altcoins lower with a nearly 11% plunge. The overall crypto market capitalization shed approximately 6% in a single day, erasing billions in market value.
The Trump Premium Fades
The sell-off also underscored a growing realization in the market: much of the optimism surrounding Donald Trump’s pro-crypto stance has already been absorbed into prices. Bitcoin rallied from around $70,000 to its $108,000 all-time high in the weeks following Trump’s November election victory, driven by promises of a national Bitcoin stockpile, crypto-friendly regulation, and the appointment of industry advocates to key government positions.
Omid Malekan, a Columbia University business professor, told Fortune that the recent price action indicates the market is now searching for the next catalyst. “The positive news from the election is mostly priced in,” Malekan explained. “Trump takes office in a few weeks. There will be this question of when the rubber hits the road, what is he actually going to do?”
Trump had already followed through on some promises, including appointing an AI and crypto czar and signaling that pro-crypto commissioners would lead the SEC and CFTC. But the details of actual crypto policy remain uncertain, and the market is growing impatient.
From $108K to $97K — A Story of Expectations
Bitcoin’s journey from its December 17 all-time high of $108,000 to the January 7 low near $97,000 illustrates the volatility that comes with high expectations. After peaking in mid-December, Bitcoin had already experienced a significant drawdown, falling to as low as $92,000 before staging a partial recovery in late December and early January. The January 7 sell-off effectively erased that recovery and pushed Bitcoin back toward the lower end of its post-election trading range.
According to CoinMarketCap historical data, Bitcoin was trading at approximately $96,922 at the daily snapshot, with a market capitalization of roughly $1.92 trillion. The 24-hour trading volume surged to over $58 billion, reflecting the intensity of the sell-off and the volume of forced liquidations cascading through the market.
Why This Matters
Bitcoin’s drop below $100,000 on January 7 is more than just a number — it represents a shift in market psychology. The $100,000 level has served as both a psychological magnet and a support level since Bitcoin first broke through it in December 2024. Losing it, even temporarily, tests the conviction of both retail and institutional investors who piled in during the post-election euphoria.
The macro backdrop is the real story. The ISM Services data confirmed what many economists had suspected: the U.S. economy remains remarkably resilient, with strong job openings and expanding services activity. That resilience means the Federal Reserve is likely to maintain higher interest rates for longer, reducing the attractiveness of non-yielding assets like Bitcoin.
However, the medium-term outlook still has bright spots. The incoming Trump administration is expected to bring sweeping changes to crypto regulation, with pro-industry leaders at the SEC and CFTC likely to introduce clearer and more favorable rules. Whether that will be enough to push Bitcoin back above $100,000 — and ultimately to new all-time highs — remains the central question heading into the second week of January 2025.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency markets are highly volatile, and you should always conduct your own research before making any investment decisions.
went from $102k to $97k in hours because of one PMI print. the leverage in this market is still insane
$205M liquidated in a single hour over a services PMI print. the leverage is the problem not the macro data
205M in an hour is just retail getting stopped out. the real liquidations were the 622M over 24h. whale desks were hunting stops all morning
205 million liquidated in a single hour. someone was on the wrong side of that PMI print with 100x leverage and got absolutely destroyed
the 10-year treasury yield surging on strong jobs data is what really crushed btc. higher for longer means risk off
ISM Services at 54.1 was genuinely surprising. economy running hot means no rate cuts and risk assets get hammered. simple macro
54.1 ISM print means the economy is running hot and rate cuts get pushed back. simple as that. btc trades off fed expectations now
54.1 PMI in december means the holiday season was stronger than expected. economy doesnt need rate cuts when its running like that. btc paid the price
Columbia professor saying trump election excitement is priced in was the take nobody wanted to hear but probably needed to.
btc hit $108k on dec 17 2024 and was below $97k three weeks later. 10% drawdowns are just tuesdays in crypto
btc went from 102k to 97k on one economic print and people still pretend crypto is uncorrelated. its a leveraged bet on liquidity conditions, full stop
This drop was totally expected. When ISM Services PMI jumped to 54.1, it was clear the Fed would not be cutting rates anytime soon. Bitcoin still does not understand that it is a risk-on asset in a risk-off environment.
@stop_hunt_ I think you are right about the 205M liquidations. But honestly, that is what happens when people trade 100x leverage on macro news. If you are trading leveraged positions based on PMI data, you are playing with fire.
The real story here is that we are in a regime change. Trump crypto premium is already priced in, and now we are back to fundamentals. Bitcoin will trade like a tech stock until rate cut expectations return.
ISM Services at 54.1 was the print that killed the january rally. economy running hot means Powell holds, and risk assets get repriced
622M in liquidations over 24h. people were long at 100x betting on a rate cut cycle that was never coming. leverage is the real killer not the PMI data
Hyun-jin P. 622M liquidated and people still dont get that leverage is the trade killer, not the data print. 100x on macro day is financial suicide