The global crypto market is witnessing a downturn, with the total market cap dropping to $3.48 trillion, reflecting a 0.79% decrease over the past 24 hours. Market trading volume has also shrunk significantly, falling 27.08% to $111.85 billion within the same period.
FOMC Meeting and Interest Rate Uncertainty
The crypto market crash is driven by anticipation of the 2025 FOMC meeting, as markets historically react negatively before major Federal Reserve decisions. Analysts predict a 99.5% chance of rates staying at 4.25%-4.5%, but an unexpected rate cut could spark a recovery. Strategic selling ahead of the meeting is contributing to the dip. A dovish Fed stance may trigger a Bitcoin rally, while a hawkish stance could lead to further selling pressure in the market.
ETF Outflows and Declining Investor Sentiment
The latest Spot ETF news indicates that institutional investors have been reducing their exposure to crypto assets. Bitcoin ETFs saw an outflow of $457.48 million on January 27, with nearly 8,000 BTC being liquidated, valued at approximately $800 million. Similarly, Ethereum ETFs witnessed an outflow of $136.25 million, highlighting declining investor interest in the market.
These outflows suggest that large-scale investors are taking a cautious approach, possibly due to macroeconomic uncertainty and the Federal Reserve’s upcoming decisions. As a result, Bitcoin fell to $102,420.24, experiencing a 0.36% intraday drop, while Ethereum slumped to $3,137.80 after a 1080% daily drop in trading volume.
The Fear and Greed Index, a critical indicator of market sentiment, currently stands at 72 (Greed), the same as yesterday but a notable decline from last week's Extreme Greed (84). This decline suggests that investor enthusiasm has cooled significantly, contributing to the ongoing market downturn.
A month ago, the index was at 65, showing a more stable bullish sentiment. However, the sharp drop from last week's Extreme Greed indicates that traders are shifting towards caution, likely due to fears of increased volatility stemming from the FOMC meeting 2025 and ETF outflows. Historically, when the index moves downward from extreme levels, it often correlates with a crypto crash or market correction.
While short-term volatility is expected, a potential dovish stance from the Federal Reserve could provide a catalyst for Bitcoin and other cryptocurrencies to rebound. If ETFs regain inflows and investor sentiment improves, the market could stabilize and reverse its downward trajectory. For now, the crypto market remains at a critical juncture. The upcoming Fed Meeting news will play a key role in determining whether Bitcoin, Ethereum, and other assets will recover or face further corrections.
Also read: Bitcoin Price Crash Ahead of FOMC Meeting: What’s Next for $BTC?
Deepmala Upadhyay is an experienced crypto journalist, content strategist, and News writer with over 5 years of expertise in writing and the crypto industry. Holding a Bachelor's Degree in Computer Science and a deep understanding of blockchain technology and financial markets, she excels in delivering exclusive news, in-depth research blogs, and expertly crafted on-page SEO content. As a team lead and content writer at CoinGabbar, Deepmala is responsible for analyzing blockchain technologies, cryptocurrency, price movements, and the crypto market with precision and insight. Her keen ability to create well-researched, impactful content, combined with her expertise in market analysis, makes her a trusted voice in the crypto space.
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