Why Is Bitcoin and Cryptocurrencies Falling Today? Recent Developments Affecting the Market!

• The crypto market experienced a broad selling wave on Friday, reducing the global crypto market value by nearly 4% to $1.61 trillion.
• The Bitcoin price, dropping from $42,720 to $40,631 within a few hours, extended the nearly 4% decline over the last 24 hours.
• The maximum pain point is $44,000, indicating traders are under selling pressure. The BTC price dropped by 4%, currently trading at $41,380.

Bitcoin and cryptocurrencies remain under selling pressure on Friday due to macro effects and option data!

Bitcoin and Cryptocurrencies Weaken on Friday

The crypto market witnessed a widespread selling wave on Friday, reducing the global crypto market value by nearly 4% to $1.61 trillion. The transactions concluding on Friday caused almost $250 million in liquidation in the last 24 hours, causing damage to traders and investors. The Crypto Fear & Greed Index dropped from 63 (greed) to 56 (neutral).

The Bitcoin price, dropping from $42,720 to $40,631 within a few hours, extended the nearly 4% decline over the last 24 hours. Top altcoins Ethereum (ETH), Solana (SOL), XRP, Cardano (ADA), and others also experienced a 3-7% decline within a few hours. LUNC’s price dropped by 9% in the last 24 hours after the failure of recent proposals and is currently trading at $0.000113. Traders anticipated that the listing of Spot Bitcoin ETFs would keep the crypto market stagnant throughout the week.

Especially, an $890 million principal value option with 22,000 BTC expiring on January 19 has a put-call ratio of 1.1. The maximum pain point is $44,000, indicating traders are under selling pressure. The BTC price dropped by 4%, currently trading at $41,380.

Additionally, a $520 million principal value option with 211,000 ETH has a put-call ratio of 0.55. The maximum pain point is $2,500, higher than the current price of $2,469. The ETH price dropped by 3% in the last 24 hours, with a 24-hour low price of $2,486.

Coinglass data shows a significant liquidation of $250 million on January 19. More than 103,000 traders were liquidated in the last 24 hours, with the largest single liquidation order on Binance’s BTCUSDT being worth $7.31 million. As a result of the broad selling wave, the crypto market is currently in the “red” today.

Bitcoin and Ethereum futures open positions dropped below $18 billion and $8.5 billion, respectively, but they may start to rise again with an expected recovery. Options look better despite expirations; calls are still high for Bitcoin and Ethereum, but there has been a general decrease in the last 24 hours.

Macro Effects

A strong US dollar is putting selling pressure on Bitcoin. The US Dollar Index (DXY) is returning from 101 to above 103.50 in early January. Furthermore, the US 10-year Treasury yields, rising over 4% this week after the listing of Spot Bitcoin ETFs, are climbing again.

Hawkish Fed officials limited expectations of a rate cut in March. Data released on Thursday showed that initial jobless claims dropped to 187K, contrary to expectations, marking the lowest level since September of last year.