Cryptocurrency Chaos: What Secret Forces Are Driving the Market’s Latest Downturn?

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The cryptocurrency market experienced a downturn today, seeing a 3% decrease in total market capitalization to approximately $3.54 trillion as of January 23. Major cryptocurrencies, Bitcoin and Ether, have each declined by 2.6% in the last 24 hours.

The decline is partly attributed to unmet expectations regarding potential executive orders on cryptocurrency by President Trump following his return to the White House. Despite assurances that his administration would adopt policies to transform the United States into a “crypto capital,” no specific executive orders have yet been issued. Anticipated measures include the establishment of a Strategic Bitcoin Reserve and the creation of a crypto advisory council. However, his policy proposal to eliminate capital gains tax on US-born cryptocurrencies has raised concerns about potential market imbalances.


In addition to policy factors, macroeconomic indicators have also influenced the market decline. Recent data shows unexpected growth in the US services sector, leading investors to seek safer assets and contribute to rising Treasury yields. Concurrently, the US dollar has strengthened, with the DXY index climbing amid anticipated tariff increases on China, Mexico, and Canada by February 1.

Further complicating market conditions, the Federal Reserve’s recent announcements suggest only two interest rate cuts in 2025, a more cautious stance than the previous expectation of three. Futures markets have nearly assured that interest rates will remain unchanged at the Federal Reserve’s upcoming meeting on January 29, with the earliest possible cut predicted for June.

In the technical analysis realm, the combined market capitalization of all cryptocurrencies has broken below the critical 50-day simple moving average, turning this metric from support to a barrier against any price recovery. Additionally, the relative strength index has fallen, indicating a potential continuation of the downtrend if selling pressure persists.

Investors and traders are encouraged to consider these factors carefully, as the cryptocurrency market remains volatile and subject to rapid changes influenced by both domestic policies and broader economic dynamics.