Why Crypto Market is Down Today: Will It Rise Again or Struggle?

Why Is the Crypto Market Down? Upcoming Events Influencing the Market

The cryptocurrency market is experiencing a downturn, with the global crypto market cap standing at $3.2 trillion, marking a 0.81% decrease in the last 24 hours. While total trading volume has increased by 24.42% to $72.35 billion, major cryptocurrencies like Bitcoin, XRP, and Solana price have suffered significant price drops.

Bitcoin, the market leader, has slid back to critical support levels. Currently, Bitcoin's price is at $96,079, holding above the crucial $95,869 support level, which has remained intact for nearly a month. However, if this support level breaks, Bitcoin could decline further to $93,625, which would reinforce bearish sentiment across the market.

Why Crypto is Crashing? Main Factors to Consider

Several macroeconomic factors are contributing to why the crypto market is down today:

• U.S. Inflation Concerns:

• The January Consumer Price Index (CPI) report showed inflation remains above the Federal Reserve's 2% target, reducing hopes of imminent rate cuts.

• The Federal Reserve’s stance on interest rates has prompted investors to move away from risky assets like cryptocurrencies.

• Fed Meeting January 2025 & Market Uncertainty:

• The upcoming Fed Meeting news is expected to provide insights into the central bank’s stance on inflation and future rate cuts.

• If the Fed remains hawkish, the market may continue its downward trend.

• U.K. and Japan Inflation in Focus:

• U.K. inflation is rising, with consumer prices increasing by 2.8% in January.

• Japan's core inflation hit 3.1%, its highest level in 17 months, leading to concerns about delayed policy easing by central banks.

Fear and Greed Index: A Shift Towards Neutral

The Fear and Greed Index has dropped from Extreme Greed (77) last month to Neutral (51) now. This shift indicates that investors, once extremely optimistic, are now cautious amid market uncertainty.

• Last Month: Extreme Greed (77) – Market was overbought, leading to a correction.

• Last Week: Fear (43) – Investors became wary.

• Now: Neutral (51) – Market indecision with investors waiting for clarity.

Extreme greed often precedes a market correction, while neutral sentiment suggests potential stabilization before the next move. This shift is one of the key reasons why crypto is down today.

Current Crypto Market Performance

The recent downturn has affected major cryptocurrencies including Bitcoin, XRP and Solana. 

Bitcoin is trading at $96,105.89, down 1.12% in the last 24 hours, with a $1.9T market cap and $21.41B in trading volume. XRP fell 2.64% to $2.67, with a $154.69B market cap and $4.22B volume. Solana Price dropped 4.79%, now at $183.47, with a $89.84B market cap and $3.27B in volume.

Will Crypto Market Recover?

Despite the current downtrend, there are factors that could lead to a recovery:

• FOMC Meeting Insights: If the Federal Reserve signals future rate cuts, risk appetite for cryptos could return.

• SEC Crypto ETF Approvals: The active stance of the SEC on potential XRP ETF and other upcoming ETFs could attract new investors.

• Macroeconomic Data: Upcoming PMI reports and consumer sentiment data may provide insights into economic stability, influencing crypto market trends.

Looking at the future of crypto in the next 5 years, the market remains volatile but promising. Institutional adoption, regulatory clarity, and technological advancements in blockchain could drive long-term growth. However, short-term fluctuations driven by macroeconomic events will continue to shape market movements.