Since January 22, 2025, the total market capitalization of the cryptocurrency market has fallen by 3.64%, the total market capitalization of altcoins by 2.72%, and the market capitalization of the cryptocurrency market excluding the top ten cryptocurrencies , by approximately 5.2%. Over the past 24 hours, almost all of the top ten cryptocurrencies have seen declines; Bitcoin and Ethereum fell 3% each, XRP 2%, Solana 2.5%, BNB 1.9%, Dogecoin 3.5% and Cardano 3.5%. Let’s take a look at the main reasons why the crypto market has seen a significant decline.
Main reasons behind the latest cryptocurrency sell-off
Trump’s speech is disappointing
The crypto community expected Trump to mention his Bitcoin reserve plan during his inaugural speech. Contrary to expectations, Trump did not make any comments on the crypto industry during his speech. Naturally, this speech caused great disappointment in the community. However, as a small relief, the US SEC has decided to create a crypto task force to develop a clear regulatory framework for the cryptocurrency sector.
Impact of Bank of Japan rate hike
There are rumors that the Bank of Japan may raise interest rates by at least 25 basis points, to 0.5% tomorrow. At the start of January 2024, it was around -0.1%. In March, it was increased to 0.1%. In July, it went from 0.1% to 0.25%. Since then, it has remained unchanged. If raised to 0.5%, rates could reach their highest level in at least 18 years.
US Federal Reserve meeting
Reports suggest that the US Federal Reserve is unlikely to change interest rates at the January 29 meeting.
The US Fed announced a 25 basis point rate cut in December, bringing interest rates to a range of 4.25% to 4.5%. It even announced at least two rate cuts in 2025, totaling at least 50 basis points.
However, given the weakening US macroeconomic scenario, the Fed is less likely to introduce rate cuts this year.
US Dollar Index and Treasury Yields
On US election day, the US dollar index was 103.901. Since November 5, the US dollar index has jumped about 4.16%. For now, it stands at 108,227.
On January 6, the yield on 10-year US Treasury bonds reached its highest level since April 2024. Although between January 6 and 13 it faced downward pressure, since January 13, it has increased steadily. Currently it stands at 4.6357%.
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Expiration of BTC and ETH options
Data shows that 29,000 BTC options ($3 billion notional value) and 169,000 ETH options ($0.5 billion notional value) are set to expire soon.
In conclusion, the crypto market sell-off highlights the combined impact of macroeconomic factors, disappointing political developments, and technical factors such as options expiration. As BTC and ETH struggle with global uncertainties, investors should closely monitor regulatory developments, rate changes, and market trends to make informed decisions. Stability could only return when macroeconomic conditions improve or institutional confidence returns.
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