Crypto market faces volatility. The crypto market is down, with a 3% drop in total market capitalization to $3.54 trillion on Jan 23. The majority of top cryptocurrencies are in the red, with Bitcoin and Ether each dropping 2.6% in the past 24 hours.
Key metrics:
Ether: $3,272.21 (down 2.6%)
Total market cap: $3.54 trillion (down 3%)
Bitcoin: $102,118 (down 3%)
Crypto market faces volatility. Delay over crypto-related executive orders
President Trump’s second term is expected to boost the crypto market. He has pledged to make the US the “crypto market capital.”
Trump’s proposed Strategic Bitcoin Reserve aims to position the US as a crypto leader. This could strengthen the country’s financial position. Regulatory reforms are anticipated to aid crypto firms. A crypto-friendly SEC chair appointment and passage of crypto-friendly legislation are also expected.
At the time of publishing, President Trump has introduced no specific executive orders that pertain to cryptocurrency policies. It is said he’s expected to propose various crypto-friendly policies, such as forming a crypto advisory council and rescinding SEC Accounting Guidance (SAB 121).
The Trump administration’s new Crypto Taskforce to create a framework for the regulation of digital assets by the Securities and Exchange Commission on Jan. 21 is seen as another Trump move toward fulfilling such campaign promises.
Macroeconomic indicators: the crypto market faces volatility.
Outside of crypto policy, today’s crypto market slump is also a response to wider macroeconomic indicators. A faster-than-expected growth in the US services sector recently has raised Treasury yields as investors rushed to safer assets.
The US dollar is also firming, with the DXY index trading up for the third day in a row, gaining 0.61% from a low on Jan. 22 at 107.75 to as high as 108.40 at press time. This may be due to the set of tariffs Trump said his administration will “introduce on China, Mexico and Canada,” The Kobeissi Letter said.
“President Trump said that 25% tariffs on Canada and Mexico and 10% tariffs on China are likely by Feb 1st.”
This is causing the US dollar to rise, “pricing in tariffs’ and “America first policy” put forth by the Trump administration, the comments also said. In addition, the Federal Reserve’s choice to flag only two interest rate reductions in 2025, versus the three initially expected, has brought a more hawkish tone. Futures markets have fully priced in the chance of interest rates being held steady at the US Federal Reserve’s Jan. 29 meeting; the likelihood there is a 99.5% chance of it, per the CME FedWatch tool.
The first potential cut is widely forecasted in June; probabilities for June are now at 44.8%. Notably, this change to monetary policy implies an ongoing battle against inflation, or perhaps higher borrowing costs and a tougher climate for risky assets, such as cryptocurrencies.
TOTAL 50 SMA becomes resistance
In TOTAL, the combined market cap of all cryptocurrencies lost key support at the 50 simple moving average (SMA) at the 4h timeframe, and the price dropped to $3.5 in today’s drawdown in crypto prices.
That level is now an immediate resistance on the upside and adds further headwinds to the sell-off.
Further, the relative strength index (RSI) has slipped from the overbought territory at 75 on Jan. 17 to 44.
If selling accelerates, the crypto market may drop to $3.43 trillion, a support level since January 19. Renewed buying pressure could push the market cap above $3.61 trillion, the local high from January 21.