Cryptocurrencies Plunge, Wiping Out All 2025 Gains

Cryptocurrencies fell for the third consecutive session, with Bitcoin dropping 2.8% in the last 24 hours to $92,500. Ethereum broke below its support level at $3,300, now trading at $3,200.

Meanwhile, other altcoins saw widespread declines of up to 7%, led by Stellar, followed by Dogecoin (-3.7%) and Avalanche (-3%). Amid this downturn, cryptocurrency ETFs recorded their second worst day in history.

BTC/USD

Leveraged Positions and Market Data

According to CoinGlass data, the recent sell-offs triggered liquidations of leveraged long positions worth a total of $1 billion. These declines have also pushed Bitcoin below its 2024 opening price. Companies tied to the crypto sector, such as MicroStrategy and TeraWulf, also suffered significant stock price drops.

Additionally, spot Bitcoin ETFs experienced net outflows of $582 million—the second-largest since their approval in 2024, surpassed only by $680 million in outflows on December 19. Spot Ethereum ETFs also saw outflows nearing $160 million, marking the largest withdrawal since late July.

Federal Reserve Policy and Bitcoin

This wave of sell-offs follows a surge in U.S. 10-year Treasury yields, which hit their highest levels since April. Experts attribute this rise to growing concerns about the future of the U.S. economy, especially after stronger-than-expected macroeconomic data.

While the relationship between BTC/USD and global liquidity isn’t strictly linear, the strengthening of the U.S. dollar and rising bond yields highlight mounting economic pressures. These forces intensified following the Federal Reserve’s December meeting, underscoring the importance of monitoring macroeconomic trends.

During the Fed’s latest meeting, interest rates were cut by 25 basis points, and expectations for further cuts in 2025 were revised down to just two.

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ABOUT THE AUTHOR See More
Ignacio Teson
Ignacio Teson
Economist and Financial Analyst
Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.
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