Cryptocurrency Bitcoin Plummets to Less than $96,000 Due to Fears of Inflation
In a surprising turn of events, Bitcoin, the world's largest cryptocurrency, experienced a significant drop on January 7, 2025. The digital asset plummeted by 6%, bringing its price down to around $95,500. This marks the highest level of decline since April, and it has sent ripples across the broader cryptocurrency market.
The primary cause of this downturn can be traced back to escalating geopolitical tensions and macroeconomic stresses. Former President Donald Trump's provocative moves related to nuclear submarine deployments amid the Russia-Ukraine conflict tensions have raised market anxiety and risk aversion, leading to a steep decline in Bitcoin's price. This event was accompanied by over $690 million in leveraged liquidations on long positions, with the majority of the volume ($631 million) coming from these long positions.
The macroeconomic environment was further pressured by Trump's new tariff policies, which contributed to a broader market sell-off. This sell-off affected not only cryptocurrencies but also traditional stock indices like the S&P 500, NASDAQ, and Dow Jones Industrial Average.
The impact on other top cryptocurrencies mirrored Bitcoin’s downturn; most altcoins also faced sharp declines during the same period. For instance, Ethereum and other major altcoins experienced synchronized drops, reflecting the crypto market’s typical correlation in times of increased risk.
Despite a slowdown in sales, demand for Bitcoin is reportedly declining, according to Glassnode analyst James Check. He also noted a drop in spot trading volumes for Bitcoin, which have dropped 54% since November.
While the market remains choppy, with Daan Crypto Trades mentioning that it's typical for the end and start of the year, the overall picture is one of instability. Technical analyst Ali Martinez identified the $104,700-$105,770 range as a critical resistance zone for Bitcoin.
The decline in the crypto market is attributed to inflation fears and faster-than-expected economic growth in the U.S., as previously reported. The market capitalization of Bitcoin currently stands at $1.89 trillion.
As for other cryptocurrencies, Cardano (ADA) has shed 11.6%, while Solana (SOL) has fallen by 9.8%, dropping below $200. Dogecoin (DOGE) has corrected by 12.5%. The decline in Ethereum is equally significant, with its price dropping 9% to $3,330.
However, there is some positive news on the horizon. Galaxy Research experts have predicted that Bitcoin could reach $150,000 in the first half of 2025 and $185,000 by the fourth quarter.
In conclusion, the combination of geopolitical conflict escalation, particularly linked to Trump’s nuclear submarine orders and tariff increases, alongside resulting macroeconomic fears, triggered the Bitcoin plunge and negatively affected the broader cryptocurrency market on January 7, 2025. The market remains unstable, and investors are advised to exercise caution.
[1] Source: CoinDesk [2] Source: Bloomberg
The decline in Bitcoin's price on January 7, 2025, was caused by escalating geopolitical tensions, particularly related to former President Donald Trump's provocative moves concerning nuclear submarine deployments amid the Russia-Ukraine conflict, and his new tariff policies that further pressured the macroeconomic environment. This event led to a synchronized drop in other top cryptocurrencies, including Ethereum, while Galaxy Research experts remain optimistic, predicting Bitcoin could reach $150,000 in the first half of 2025. [1] [2]
