Bitcoin price has fallen nearly 10% since Jan. 28 as traders dealt with a number of macro shocks throughout the week, which erased much-needed risk appetite.
After falling for the second straight day, Bitcoin price established a local bottom over $81,000 and started consolidating sideways, as long liquidations exceeding $780 million forced a mechanical reset of the market’s leverage.
The total crypto market, which briefly recovered over $3.1 trillion in the middle of the week, was down over 4.5% at the time of publication as liquidity left the volatile digital asset space for established hedges like precious metals.
This capital flight was driven by renewed geopolitical tensions and a looming US government shutdown deadline on Jan. 30, which pushed the total market capitalisation down to approximately $2.96 trillion.
For Gold and Silver, the week has been marked by historic volatility as both posted fresh lifetime highs before facing a sharp Friday correction.
Gold surged past $5,600 an ounce, and Silver breached the $120 mark early in the week, driven by a safe-haven frenzy amid tariff threats and a weakening dollar.
However, both metals surrendered some gains by Friday as investors locked in profits, with Silver tanking nearly 17% from its peak.
Market-wide caution was visible on the Crypto Fear and Greed Index, which was down 6 points over the past 7 days.
Losses were more prominent across the altcoin market. Most of the altcoins had surrendered most of their early-week gains by Friday, with the exception of a select few that managed to close the week in profits.
Why is the crypto market down this week?
Over the last seven days, the crypto market has moved from a state of cautious optimism to an atmosphere of extreme panic, shaken by a rare confluence of macroeconomic shocks, policy uncertainty, and technical breakdowns.
After opening the week in a relatively calm range between $88,500 and $91,200, investors spent Monday largely on the sidelines, awaiting the year’s first Federal Reserve meeting.
Still, early signs of capital rotation were already visible. As crypto markets drifted, capital began flowing into precious metals, with silver breaching $110 per ounce and climbing to a $6 trillion valuation, far outpacing Bitcoin, as investors sought safety ahead of escalating trade risks and a weakening dollar.
Volatility accelerated on Wednesday after the FOMC’s decision to hold interest rates steady at 3.50%–3.75%.
While the hold was mostly priced in, the accompanying rhetoric was far more hawkish than markets had priced in.
Fed Chair Jerome Powell signalled that a pause in the rate-cutting cycle was necessary due to persistent inflation concerns, a message that effectively drained enthusiasm from risk assets.
Bitcoin quickly lost its grip on the $90,000 psychological support level as the prospect of elevated rates for longer led to a swift pullback from speculative bets across the board, pressuring not just Bitcoin, but also Ethereum, altcoins, and other high-beta assets.
By Thursday, the pressure intensified as geopolitical headlines hit the tape. Rising tensions between the US and Iran and a new 10% tariff threat from the former against European nations over the Greenland dispute rattled global markets.
In the background, the looming January 30 US government shutdown deadline added further fuel to the fire.
At the same time, speculation peaked that President Trump would appoint former Fed Governor Kevin Warsh to replace Jerome Powell.
Warsh is widely viewed as an inflation hawk, and the crypto market associates him with tighter monetary policy and a firmer stance on liquidity.
Bitcoin’s price dropped more than 5% in a single session in response, sinking toward the mid-$80,000s. Ethereum and other large-cap altcoins saw even sharper declines.
On Friday, a massive $8.8 billion options expiry acted as a magnet for price action.
When Bitcoin slipped below the critical $82,000 threshold, it triggered a cascading liquidation event.
By late Asian trading hours, more than $1.7 billion in leveraged long positions had been wiped out as Bitcoin fell to a local low of $81,311, wiping nearly $150 billion off the total crypto market cap.
This persistent volatility throughout the week has hurt institutional appetite, and investors have pulled back liquidity from crypto investment products.
More than $978 million had left Spot Bitcoin ETFs by the end of Thursday’s trading session, while over $74 million had flown out of Ethereum‑linked products.
Other major altcoin products tied to assets such as XRP and HBAR recorded a similar pattern of outflows, with the exception of Solana, which managed modest inflows.
With this lack of demand and no immediate upside catalysts in sight, the market remains firmly in a state of panic, leaving prices vulnerable to further downside in the short term.
Will crypto market recover?
All eyes are now on Bitcoin, which has been dictating market direction over the past few months.
Bitcoin bulls managed to defend the $82,000 level, and the late-week liquidation events have seemingly come to rest, which could position the market for a rebound unless geopolitical tensions continue to hammer risk sentiment.
While it is too early to expect a full market-wide recovery, the current price stabilisation may help prevent further losses as long as the $80,000 psychological support remains intact.
Some signs of optimism came from Bitcoin’s MVRV Z-score, a highly followed Bitcoin metric.
Bitcoin’s MVRV Z-score, which compares market value versus realised value and measures the price at which the BTC supply last moved, has dropped lower than levels seen during past major market bottoms like 2015, 2018, the COVID crash in 2020, and the end of the 2022 cycle.
According to crypto analyst Michaël van de Poppe, Bitcoin is “close to the end” of its correction, pointing to the depth of the current Z-score as a sign that a long-term bottom may be forming.
However, Bitcoin needs to avoid a break below $78,000 to avoid more downside, pseudonymous analyst Crypto Caesar warned. See below.
Falling to that level means the Bitcoin price would also validate a Macro Triangle Bottom as highlighted by fellow analyst Rekt Capital.
“A breakdown from here would confirm Bearish Acceleration,” the analyst wrote.
Top altcoin gainers this week
The altcoin market initially reached a weekly high of $1.33 trillion before experiencing a sharp drop of 8.4% at the end of the week and settling at $1.2 trillion.
Ethereum (ETH) fell nearly 6% in the period, while other large-cap altcoins such as BNB (BNB), XRP (XRP), Solana (SOL), and Dogecoin (DOGE) recorded losses ranging between 4-8%.
Nearly all of the top 100 altcoins had fallen into the red at the time of writing, erasing all of the gains seen earlier in the week.
Some of the top laggards were Dash (DASH), Story (IP), and Immutable (IMX), recording double-digit losses of 26.5%, 18%, and 17%, respectively.
Hyperliquid gained nearly 39% this week, largely due to its HIP-3 upgrade bringing a surge in commodities trading.
Most volume came from the silver perpetual market, which hit $1 billion amid a precious metals rally. Hyperliquid uses its fees to buy back and burn HYPE tokens, reducing supply.
A spot listing on the Kraken exchange and a 90% cut in team token unlocks for February also helped it hold its gains by reducing supply pressure.
Stable (STABLE) surged 29% this week to reach a new all-time high, driven by a 150% spike in trading volume following the recent launch of USAt, Tether’s first federally regulated, dollar-backed stablecoin.
Canton (CC) climbed 18% this week, also fueled by a surge in trading activity as major financial institutions, including Nasdaq and Tharimmune, began operating as Super Validators for the network.
This marked the shift from testing phases to live, full-scale production, with the network now processing trillions in monthly transactions and integrating live bank currencies like JPMorgan’s digital dollar, JPM Coin.
Source: CoinMarketCap
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