Dogecoin Declines 10% as Bitcoin Hits $96K, Causing $560M of Long Positions to Be Liquidated.

Dogecoin (DOGE) led the losses among major cryptocurrencies on Tuesday, falling by 10%, as Bitcoin (BTC) dropped to just under $96,000. The decline was sparked by stronger-than-expected economic data out of the U.S., which caused Treasury yields to rise, putting pressure on risk assets like cryptocurrencies. Solana (SOL), Cardano (ADA), Binance Coin (BNB), and Ether (ETH) also experienced significant losses, each dropping between 7% and 9%. Bitcoin saw a 5.5% dip, while the broader CoinDesk 20 (CD20) index, which tracks the largest digital assets by market capitalization, fell 7.1%.

This pullback led to approximately $560 million in long positions being liquidated across the futures market. Liquidations occur when traders are forced to close their leveraged positions due to the inability to meet margin requirements. The sell-off created a cascading effect, where falling prices triggered further liquidations, leading to even steeper declines.

The economic data, which included a report from the Institute for Supply Management (ISM) showing stronger-than-expected growth in the U.S. services sector, contributed to a shift in market sentiment. The ISM Services PMI reached a robust 54.1 for December, surpassing expectations of 53.3, while the “prices-paid” component hit 64.4, signaling continued inflationary pressures. Additionally, U.S. job openings came in higher than anticipated, further fueling concerns that the Federal Reserve may not cut rates as soon as hoped.

The economic developments also had a broader impact on U.S. financial markets, pushing the 10-year U.S. Treasury yield to its highest level since May, at 4.68%. This rise in bond yields contributed to the sell-off in equities, with the Nasdaq falling more than 1% and the S&P 500 down 0.4% in late morning trading.

Despite the setback, some market participants remain optimistic. Vince Yang, CEO of zkLink, noted that such dips are common in the crypto market and often precede a stronger upward move. “While the market is currently facing some short-term turbulence, we believe the long-term outlook remains positive, especially with a potentially more crypto-friendly U.S. government on the horizon,” Yang said.

On the other hand, QCP Capital remains cautious, warning that January could remain volatile for crypto markets. The firm pointed to the upcoming reinstatement of the U.S. Treasury debt ceiling as a potential source of instability, which could lead to further market fluctuations as discussions around government spending intensify.