Cryptocurrency Market Extends Losses for Third Day

The cryptocurrency market extended its losses for the third consecutive day, building on Tuesday morning's sharp decline—the largest in nearly a month—as investor caution remains high.

Bitcoin (BTC) dropped 3% in the past 24 hours, trading at $91,300, while Ethereum (ETH) declined 3.4% to $3,170. XRP dropped 2.2%, while Solana (SOL) fell 6%. The overall cryptocurrency market capitalization decreased by 4.4% to $3.38 trillion, according to CoinGecko.

In the past 24 hours, 130,000 traders were liquidated, with total liquidations coming in at $404 million, according to CoinGlass. BTC accounted for around $106 million in liquidations, while ETH followed with $84 million. Altcoins recorded $58 million in liquidations. The largest single liquidation order, valued at around $12 million in ETHUSDT, occurred on Binance.

Monetary Policy

“Bitcoin could be in for a choppy, wide, range-bound ride (this will suit traders and cause some hodlers to question the bull market),” said Bill Barhydt, CEO of Abra, who expects Quantitative Easing (QE) to commence by March as a strategy to reduce long-term U.S. interest rates.

“The second the Fed hints at QE, risk-on assets will explode to the upside – this is likely the trigger for altcoin season,” Barhydt added, noting that the market could see Bitcoin at $200,000, Sui at $20 and Solana at $500.

The ongoing sell-off highlights the cryptocurrency market's heightened vulnerability to broader economic pressures and shifts in investor sentiment.

JOLTS Report

Alan Orwick, co-founder of Quai Network, told The Defiant that the decline could also partly be traced to macroeconomic data from the US, particularly the JOLTS report, which revealed higher-than-expected job openings. This data has fueled concerns about a potential Federal Reserve tightening, adding to market volatility.

“The data coming out of the US would suggest a strong job market, reducing the likelihood of near-term interest rate cuts by the Fed, which would reduce expectations for the liquidity which would then benefit crypto,” Orwick said.

He added that as major tech stocks declined this week, BTC and other cryptocurrencies also experienced a decline, noting that crypto and traditional equity markets, particularly tech stocks, are highly correlated.

This trend was further highlighted by BTC spot exchange-traded funds (ETFs), which recorded their largest withdrawals—approximately $583 million—on Jan. 8, marking the most significant outflows since Dec. 19, 2024, according to SoSoValue data.

DOJ Cleared to Sell Crypto

Investor sentiment was further battered by news that the U.S. Department of Justice (DOJ) has been cleared to liquidate approximately $6.5 billion worth of Bitcoin. These 69,000 BTC were seized from the Silk Road darknet marketplace.

According to DbNewswire, the DOJ cited Bitcoin's high volatility as a key reason for its decision to sell the cryptocurrency.