The crypto market is witnessing a sharp selloff on Thursday, with bitcoin leading the plunge as its price crashes below the $91,000 threshold. This marks bitcoin’s lowest level in over a month, with the leading cryptocurrency shedding nearly 3% in value over the past 24 hours. The broader crypto market is also bleeding out, as reflected by the CoinDesk 20 Index declining by a similar margin.
Altcoins Tumble Amid Market Rout
While bitcoin faces heavy selling pressure, some major altcoins are faring even worse in the ongoing market downturn. Notable underperformers include smart contract platforms Solana (SOL) and decentralized oracle network Chainlink (LINK), both of which have seen their prices plummet by double-digit percentages.
The widespread crypto rout comes as markets anxiously await the release of the December U.S. jobs report on Friday morning. Strong employment numbers could further dash hopes for a Federal Reserve pivot to more dovish monetary policy in 2025.
Economic Data Challenges Rate Cut Narrative
Crypto markets rallied significantly in Q4 2024, buoyed by Donald Trump’s election victory and anticipation of a more crypto-friendly regulatory environment. Another key factor fueling the bullish sentiment was the prospect of looser monetary policy, as the Fed slashed interest rates by 1% since September. However, that narrative is now being challenged.
A spate of robust economic indicators, signaling both a resilient economy and stickier-than-expected inflation, has Markets reassessing the likelihood of continued rate cuts. Long-term bond yields have spiked by over 1% in response to the data, exerting downward pressure on risk assets like crypto.
“BTC, ETH and SOL are now revisiting December 5 range lows and people are beginning to accept the fact that these levels may not hold. This is when most people start panicking.”
– Eugene Ng Ah Sio, Crypto Trader
Bitcoin’s Next Crucial Support Levels
As bitcoin teeters just above $90,000, crypto analysts are eyeing the next key support zones that could come into play if current levels fail to hold. Well-known trader Eugene Ng Ah Sio notes that $85,000 is the downside target to watch if $90,000 is decisively breached.
Meanwhile, Asymmetric Capital founder Joe McCann suggests bitcoin could careen as low as $75,000 if it cannot maintain its footing above the pivotal $90,000 price point. These bearish prognostications underscore the fragility of crypto market sentiment amid the ongoing sell-off.
Silk Road Bitcoin Selling Adds to Market Woes
Prominent trader Skew attributes the latest leg lower in crypto prices partly to reports of additional bitcoin selling related to the Silk Road case. While analyzing Binance order book data, Skew observed that bids to buy bitcoin below current levels still outweigh immediate selling pressure, providing some reassurance.
“Something to note here is the lack of volatility behind price here, which is partly the sell flow not being sizable, and the amount of bid liquidity which outweighs current sell pressure. This doesn’t look that bad.”
– Skew, Crypto Trader
Market Awaits Jobs Data for Clues on Fed’s Next Move
As the crypto market braces for the release of December’s U.S. nonfarm payrolls data, participants will be closely watching to gauge the health of the labor market and its potential implications for monetary policy. A strong jobs print that exceeds expectations could see rate hike wagers gain traction, likely compounding the market pain.
On the other hand, a downside miss on the employment front might help temper the recent rise in yields and alleviate some of the selling pressure on crypto assets. Market players will also be attuned to the wage growth figures, as an uptick could stoke concerns about persistent inflationary pressures.
Volatility Likely to Persist as Uncertainty Reigns Supreme
Amid the rapidly shifting macroeconomic landscape and the looming event risk posed by the jobs report, the crypto market appears poised for ongoing volatility in the near term. As bitcoin and major altcoins struggle to find stable footing, traders will need to navigate the turbulent waters with caution.
While some analysts highlight the presence of strong bids below current prices as a potential bulwark against further downside, others warn that a break of crucial technical levels could usher in a more protracted and deeper market retracement. As ever, the crypto space remains highly sensitive to broader economic developments and shifts in monetary policy expectations.
In the coming sessions, market participants will be laser-focused on the December jobs data and any hints it may offer about the future path of interest rates. A resurgence of rate hike bets could spell more trouble for crypto bulls, while a softening of economic indicators might provide some much-needed relief. Regardless of the outcome, the crypto market seems braced for heightened turbulence as it navigates this critical juncture.
