Crypto Market Crash: Reasons Why Bitcoin, ETH, XRP, DOGE, SOL, SUI Are Falling

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On Monday morning in the U.S., a significant selloff occurred across the cryptocurrency market, causing the total market capitalization to drop by more than 2% from approximately $3.34 trillion down to a low of $3.21 trillion. This event resulted in investors losing around $130 billion in value. Notably, Bitcoin (BTC) and Ethereum (ETH) prices neared important support levels, while other popular altcoins such as XRP, BNB, Solana (SOL), Cardano (ADA), and SUI experienced declines of 3-8%. This market downturn triggered a wave of panic selling.

Dogecoin (DOGE) and Shiba Inu (SHIB) prices have experienced a steep drop of approximately 5%, as the market stabilizes ahead of next week’s inauguration of former President Donald Trump.

In simpler terms, the prices of Dogecoin and Shiba Inu have fallen by about 5% due to some market adjustments prior to Donald Trump’s upcoming inauguration next week.

Crypto Market Crash: Over $400 Million in Top Crypto Liquidated

According to data from Coinglass, more than $400 million worth of cryptocurrencies have been liquidated in the past 24 hours, affecting over 170,000 traders. The largest single liquidation order, valued at approximately $8.21 million in BTCUSDT, took place on the crypto exchange Binance.

Approximately $330 million worth of long positions, along with $70 million of short positions, were forcedly closed (liquidated). Bitcoin, Ethereum, Dogecoin, Solana, Ripple, and Sui saw the most liquidations among cryptocurrencies. In just the past hour, a total of $55 million in crypto assets were liquidated, resulting in a significant drop in the crypto market.

GM!#BTC Liquidation Heatmap(48 Hour)

100x long got liquidated

Liquidity Grab .

— CoinGlass (@coinglass_com) January 13, 2025

Macro Factors Create Headwinds

After unexpectedly strong employment figures suggested a vigorous U.S. economy, traders have become more prudent in their approach. Worry over potential inflationary tariffs under President-elect Donald Trump has further contributed to this cautious stance. This situation provides the Federal Reserve with additional time to postpone any further interest rate reductions this year.

As a crypto investor, I’ve noticed a shift in the expected Federal Reserve rate cuts this year. The financial titans like Goldman Sachs, Bank of America, and Barclays have signaled a delay in these rate cuts. Glancing at federal funds futures, it appears that traders are no longer banking on rate cuts before the year’s end.

For the first time since 2022, the U.S. dollar index (DXY) has climbed above 110. Simultaneously, the 10-year Treasury yield reached 4.8%, a peak not seen since October 2023. This upward trend in both indices has led to a significant fall in the value of Bitcoin.

This upcoming week could see a continuation of challenging conditions for the market, with key indicators like US Consumer Price Index (CPI), Producer Price Index (PPI), and jobless claims on the horizon. There’s a possibility that these figures could exacerbate the ongoing downturn in the crypto market.

Whales and Institutions Selling Bitcoin and Ethereum

The cost of Bitcoin dropped beneath the crucial threshold of $92,000, and Ethereum’s price may dip below $3,000, due to large investors and financial institutions selling off their assets. This trend was initially indicated by a withdrawal of Bitcoin from exchange-traded funds (ETFs).

According to CoinGape’s report, the activity on the Bitcoin network is at its lowest point since November 2024. Additionally, the Short-Term Holders’ SOPR (Spent Output Profit Ratio) has dropped below 1, indicating that short-term holders are currently selling their bitcoins at a loss. If BTC fails to maintain this significant support level, there’s a risk it could plummet to $80K.

Justin Sun, creator of Tron, recently transferred approximately $320.4 million of Ethereum to cryptocurrency platform HTX over the past 13 hours. It appears that large Ethereum holders are selling their ETH at a loss.

As a market analyst, I’ve been closely observing the price trends of XRP and I must say, recent predictions by CoinGape Markets indicate some potential challenges ahead for this cryptocurrency. Despite breaking out from the symmetrical triangle formation, the overall outlook remains ambiguous.

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2025-01-13 14:14