Why Crypto Market Is Down Today: How Will Fed Shape Crypto’s Path?
Meme Coin Trade Volumes Plummet: A $17 Billion Decline in a Month
The cryptocurrency market has witnessed a dramatic fall in meme coin trading volumes, which have dropped from $35 billion to less than $18 billion within a single month. This decline highlights the waning enthusiasm for meme coins amid broader market turbulence.
Arthur Hayes Predicts Crypto Turbulence on Trump’s Inauguration Day
Crypto billionaire Arthur Hayes has forecasted significant volatility in Bitcoin and the broader crypto market around January 20, the day of Donald Trump’s oath-taking ceremony. Hayes revealed that his Maelstrom investment fund plans to scale down its positions ahead of the anticipated market upheaval.
Bitcoin and Ethereum Slide Amid Federal Reserve Uncertainty
The cryptocurrency markets are preparing for heightened volatility as the Federal Reserve’s interest rate decision looms. Bitcoin (BTC) has dipped by 2.50% over the past 24 hours, while Ethereum (ETH) has dropped by 4.50%. The global crypto market capitalization has fallen to $3.79 trillion, reflecting a 4.80% decline.
Fear and Greed Index Signals Extreme Greed
Despite recent corrections, the Fear and Greed Index remains at an “extreme greed” level, with a reading of 81 signaling overbought conditions, potentially amplifying market risks.
Jerome Powell’s Fed Announcement: Key Rate Cut Expected Amid Market Worries
Jerome Powell, chair of the US Federal Reserve, is set to announce the latest monetary policy at 12:30 am IST. Market expectations lean toward a 25 basis point (bps) rate cut. However, concerns are growing about a potential hawkish tone that may signal a slower pace of monetary easing in 2025.
Upcoming Global Economic Events Add Pressure to Crypto Markets
Following the Fed’s policy announcement, major events like the Bank of Japan’s Policy Rate, Bank of England Rate, US Final GDP, Unemployment Claims, and Core PCE Price Index are expected to shape market sentiment. Hawkish signals or strong economic data could lead to further crypto market volatility and potential sell-offs.
On-Chain Data Reveals Profit Booking Among Short-Term Holders
On-chain analytics indicate a surge in profit booking by short-term Bitcoin holders. According to Santiment, BTC holders with assets held for 90 to 365 days have been actively taking profits as prices crossed $100,000. In contrast, long-term holders, who were more active in the $90,000–$100,000 range, have shown limited activity despite the price surge.
Analysts Warn of Market Correction Around Trump’s Inauguration Day
Market analysts are forecasting a significant downturn as January 20 approaches, coinciding with Donald Trump’s presidential inauguration. Hayes highlighted that his investment strategy involves reducing exposure to risk during this period of expected market turbulence.
