Bitcoin drags crypto lower on stable US economic data

The irony of the crypto market is how much it falls when the economy is doing well. On Tuesday, a pair of important economic readings were higher than expected and Bitcoin (CRYPTO: BTC) and other cryptocurrencies fell on the news.

As of 4:30 PM ET, Bitcoin is down 4.9% in the last 24 hours, Ethereum (CRYPTO: ETH) it was previously reduced by 7.4% and Dogecoin (CRYPTO: DOGE) previously fell by 8.9%. The momentum appears to be creating additional downward pressure on the market, so these declines could worsen as the US stock market closes.

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Nice economy but not suitable for crypto

The ISM services and products PMI — which measures an index of goods and services and their orders, backlogs, train replacements and other items — rose to 54.1 in December from a study of 52.1 in November. A study over 50 indicates economic expansion, so this used to be a growing study for the economy.

The Bureau of Labor Statistics’ job openings totaled 8.1 million, up from 7.8 million and beating economists’ estimate of 7.7 million, according to various surveys.

Both are reliable economic indicators, but they also come with warnings that corporations are nervous about increased costs and inflation. This could lead to the Federal Reserve being less accommodative in 2025 and undoubtedly eliminating curiosity fees if inflation picks up.

Cryptos, particularly Bitcoin and meme coins, love Dogecoin, a replacement that is heavily linked to asset options that love philosophical stocks. When traders speculate that costs will rise due to curiosity, these funds collapse. Unsurprisingly, philosophize shares fell further today.

Bitcoin and Crypto Caught Unprepared

The higher-than-expected news caught crypto traders off guard, resulting in the liquidation of $457 million in long positions due to the fall in value. Buying and selling cryptocurrencies can often be highly leveraged, and if that leverage is released when the transfer of value goes up or down, it encourages a strengthening of the underlying market pattern.

Bitcoin has not confirmed that it has hedged against inflation as supplied. On the other hand, it has fallen when inflation used to be full, and has risen in the last two years when inflation has been falling. No wonder the pattern soon changes.

Crypto catalysts are waning

The catalysts that created the fall 2024 cryptocurrency wave are also starting to die down. Investors believed the election would lead to reduced US guidelines and a more specific operating environment for crypto corporations. This will be considered gentle, but it will undoubtedly take months or years for real improvements to affect the crypto market.

Even when that happens, Bitcoin and Dogecoin simply can’t be where innovation is taking space anymore. I estimate that the love of the Ethereum blockchain more than undoubtedly holds a good thing in blockchain innovation, but even then it simply does not bring more profit than the token itself.

Advances in stablecoins and fast, low-cost blockchains and Layer-2 solutions built on top of Ethereum will most definitely be what developers influence in 2025. This could well support crypto in general without attracting unique traders to these tokens. Catalysts and speculation are fading in 2024, and this is the interpretation that is hurting cryptocurrency across the board today.

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Travis Hoium has positions in Ethereum. Motley Idiot has positions and recommends Bitcoin and Ethereum. Motley Idiot has a revelation.

The views and opinions expressed in this document are those of the author and are no longer necessarily condemned by law as those of Nasdaq, Inc.