Bitcoin (BTC) Price Falls Sharply by Over 6.2% to £76,529 ($95,405) as US Stock Market Slumps

Bitcoin (BTC) prices fell sharply by over 6.2% to £76,529 ($95,405) from over £80,215 ($100,000) in the past day, joining the US stock market slump

Bitcoin and other major cryptocurrencies experienced a sharp selloff on Friday, joining the downturn in the US stock market as key economic indicators pointed to a resilient economy and suggested that the US Federal Reserve may delay interest rate cuts.

Bitcoin prices fell over 6.2% in the past day to trade at £76,529 ($95,405) from over £80,215 ($100,000) at the last count, Chainlink, XRP, Solana, and Ether also saw losses of over 6%.

Other tokens, such as XRP, Solana, and Ether, also experienced significant declines, falling by more than 6%. Notably, these declines come as major US stock indices closed lower.

The S&P 500 index fell by 1.11% on 7th January, while the Nasdaq Composite index experienced a steeper decline of 1.89%. The downturn in the stock market was largely driven by a 6.2% drop in Nvidia shares.

Despite CEO Jensen Huang's announcement of new AI projects at CES 2025, the broader market remained pessimistic as higher-than-expected growth in the services sector and US job openings pointed to stickier inflation.

The latest Institute for Supply Management report indicated that economic activity in the US services sector expanded for the sixth consecutive month in December 2024, with prices-paid measures reaching their highest point in two years. These figures suggest that inflation remained elevated and may limit the extent of rate cuts by the US Fed this year.

The ISM's prices paid measure for service inputs rose to 64.4 last month, up from 58.2 in November. At the same time, its non-manufacturing purchasing managers index (PMI) increased to 54.1 in December from 52.1 in the preceding month amid robust demand. A PMI reading above 50 signals growth in the services sector.

In related news, a November 2024 JOLTS report showed higher-than-anticipated US job openings, although the hiring pace slowed compared to the previous month.

Moreover, the quit rate declined to 1.9% from 2.1% in October. These economic factors are prompting investors to reassess their projections for interest rate cuts, with many now expecting a less than 50% chance of cuts before June.

As the Fed is anticipated to hold rates during this month's meeting, headlines regarding potential adjustments to Trump's tariff plan also contributed to the market volatility.

President-elect Donald Trump's tariff initiatives, which specifically target China and Mexico, have the potential to further stoke inflation. However, recent reports suggest that Trump may consider altering the tariff plans by applying them to a narrower range of goods and services.

According to sources, the potential modified tariff plan would apply tariffs to select sectors critical to the US security and economy rather than all imports, marking a significant departure from Trump's campaign promises.

While the supposedly renewed approach to tariffs might not be as strong as Trump's earlier proposals, it would most likely trigger significant changes to global commerce.

However, Trump has disputed the report on Truth Social, stating that the "so-called anonymous sources, which don't exist, incorrectly state that my tariff policy will be pared back. That is wrong."

The confusion fuels more speculation about Trump's plans, including creating a pro-crypto White House, adding to the ongoing market volatility.