- More than $800M was liquidated from the crypto market within 24 hours as Bitcoin and most altcoins plunged.
- The dip was influenced by several macro-economic factors and volatility across the U.S. stock market.
The cryptocurrency market traded lower on the 27th of January, with Bitcoin [BTC] dropping below $100,000 to trade at $98,543 at press time.
The top two altcoins, Ethereum [ETH] and Ripple [XRP], were also down by 8% and 10%, respectively.
The downtrend triggered massive liquidations of over $800M per Coinglass, which affected more than 316,000 traders.
This bearish trend coincided with several macroeconomic factors that appeared to trigger panic over upcoming price volatility.
FOMC meeting on interest rates
The Federal Open Market Committee (FOMC) is expected to hold its first meeting of the year on the 29th of January.
During the meeting, the Federal Reserve will make an interest rate decision that could stir volatility across financial markets.
Data from the CME FedWatch Tool showed that 99.5% of investors anticipated that interest rates could remain unchanged at 4.25% to 4.5%, suggesting that inflation is still a concern.
Source: CME FedWatch Tool
FOMC meetings tend to affect crypto prices, as interest rate decisions could influence whether investors invest in or avoid risk assets. Therefore, if rate cuts remain unchanged, it could cause a selloff in the market.
US Futures market dips
The other reason that may have caused a dip across the crypto market is a decline in the U.S. stock futures market.
At press time, NASDAQ Futures were down by around 2.5% while the S&P 500 futures shed 1.49% per Google Finance.
This drop was triggered by the successful debut of Chinese AI startup, DeepSeek, which has toppled ChatGPT and taken the top spot on the iOS App Store.
Its launch has created concerns over the performance of tech companies such as Nvidia.
Unlike ChatGPT, which relies on Nvidia for training chips, DeepSeek uses fewer and inferior chips. This could affect Nvidia’s share in the AI market.
Dips across the US stock market tend to impact crypto prices. Therefore, if the US market opens amid this negative sentiment, it could exert further downward pressure.
Tech earnings could fuel volatility
Top tech companies including Tesla are set to release earnings this week, which could also stir volatility. In its Q3 earnings report, Tesla revealed holdings of 11,509 BTC.
Traders will watch whether this position remains unchanged, with any sell-off set to cause a decline.
The other highly anticipated earnings reports are by Microsoft and Apple. The performance of these companies could also impact cryptocurrency prices.
Despite these concerns, the crypto Fear and Greed index remains in bullish territory with a value of 71. This indicates “greed” that could help drive buying pressure to aid an uptrend.
