Crypto Markets Tumble as US Stock Market Dips

Global markets saw a sharp downturn on Thursday morning, Jan. 29, just after the U.S. stock market opened. Bitcoin (BTC) quickly dropped over 5% to below $85,000.

Within the same timeframe, the Nasdaq Composite declined about 2.3%, while the S&P 500 slipped about 1.5%.

Markets were in part dragged down by fears around Microsoft’s increased AI spending, after the software giant revealed slowed growth for its cloud division in its earnings report, published yesterday after U.S. market close.

Despite the fact that Microsoft’s Q4 revenue actually increased 17%, fears around its AI spending drove its stock down 12% this morning, while broader tech stocks also fell.

Crypto evidently followed traditional markets, as the total crypto market capitalization also fell about 5% to $2.96 trillion this morning.

Ethereum (ETH) is down 6.4% on the day to near $2,800, while most of the remaining top-10 crypto assets by market capitalization are seeing 4%-6% losses on the day.

TRON (TRX) was the only outlier among large-caps, trading flat over the past 24 hours.

Holder Conditions Still Weak

Market conviction remains cautious after the price pullback, with glassnode analysts noting in a Jan. 28 research report that Bitcoin appears to be stuck around key levels where buying and selling pressure are balanced.

“Short-Term Holder conditions still appear weak, leaving the market susceptible to additional distribution if support fails to hold and recent entrants are forced to de-risk,” the analysts wrote.

They added that sustained positive inflows and stronger spot buying would help the trend continue, while ongoing demand for downside hedging leaves the market “vulnerable to further consolidation or a deeper retracement.”

According to the Crypto Fear & Greed Index, investor sentiment is still in the “fear” zone, with traders remaining cautious since Wednesday.

Big Movers and Liquidations

Looking at the top-100 assets by market cap, Worldcoin (WLD) was the top-gainer in the past 24 hours, up over 5%, continuing yesterday’s rally on reports that OpenAI is considering a partnership with the crypto project, which was also co-founded by Sam Altman, OpenAI’s co-founder.

On the downside today, Avalanche (AVAX) led losses, down 8%, followed by Mantle (MNT).

CoinGlass data shows that over 200,000 traders were liquidated in the past 24 hours, with total liquidations reaching over $813 million. Long positions made up most of the liquidations, with nearly $700 million, as prices tumbled.

Bitcoin led the losses with over $327 million wiped out in the past 24 hours, followed by Ethereum with $134 million.

ETFs and Macro Conditions

Spot exchange-traded funds showed mixed flows on Wednesday, Jan. 28, Sppot Ethereum ETFs saw net inflows of $28.1 million, bringing total net assets to $18.22 billion, per data from SoSoValue.

Meanwhile, spot Bitcoin ETFs recorded $19.6 million in net outflows, leaving total net assets at $115.35 billion

In macroeconomic news, the Federal Reserve paused its recent streak of rate cuts, keeping its benchmark interest rate at 3.5-3.75%, as broadly expected. The decision ended three consecutive 25-basis-point reductions, signaling a cautious approach to monetary policy, CNBC reports.

Speaking at the FOMC meeting press conference yesterday, Jan. 28, Fed Chair Jerome Powell noted that available indicators suggest that economic activity “has been expanding at a solid pace.” He also pointed out that consumer spending “has been resilient,” adding that business fixed investment “has continued to expand.”

While crypto and the U.S. stock market took a hit this morning, oil prices surged, while gold and silver retraced slightly after breaking new highs yet again yesterday.