Crypto market crash started during the early Asia hours on Monday, with the top three cryptocurrencies Bitcoin (BTC), Ethereum (ETH), and XRP plunging 7-12%. The global crypto market cap also tumbled more than 7% from $3.61 trillion to $3.35 trillion, that’s $260 billion erased from the crypto market in just under 24 hours.
Moreover, the Crypto Fear & Greed Index has dropped from Greed to Neutral at 55 today, indicating a slight negative sentiment among investors.
Crypto Market Crash: Reasons Why Bitcoin, ETH, XRP & Altcoins Falling Sharply
Bitcoin price today currently trades at $98K, down 7% in the last few hours. Other the other hand, ETH price has tumbled to $3000 and XRP corrects 12% to $2.78. The crypto market crash sees no signs of slowing as experts predicted further dropdown in prices.
1. China Releases DeepSeek – A Rival to OpenAI’s ChatGPT
Chinese startup DeepSeek’s AI assistant overtook rival ChatGPT to become the top-rated free application on Apple’s App Store in the United States, reported Reuters on January 27. The DeepSeek-V3 model used Nvidia’s H800 chips for training, spending less than $6 million.
DeepSeek has left a deep impression on Silicon Valley. As a result, US stock futures tied to S&P 500 slipped 1.30%, the Nasdaq 100 lost 2.3%, and the Dow Jones industrial average is down 0.80% due to panic today ahead of quarterly results due to be released this week by four of the “Magnificent 7” stocks.
Forbes predicts that NVIDIA stock may fall as DeepSeek’s AI model challenge AI leadership of the United States with OpenAI’s ChatGPT.
2. FOMC Meeting and Donald Trump’s Tariff
Traders are becoming more cautious amid rising inflation and strong jobs data indicated a robust United States economy. Concerns over inflationary tariffs under President-elect Donald Trump have also fueled a cautionary outlook. This has given the Federal Reserve more room to delay further rate cuts during its interest rate decision on Wednesday.
Currently, CME FedWatch tool indicates there is a 99.5% probability of the Fed keeping the interest rate unchanged at 4.25%-4.50% during the January 29 meeting. The US Federal Reserve’s monetary policy decision and Jerome Powell’s comments will be the key for the stock and crypto markets.
Meanwhile, the US dollar index (DXY) has jumped to 107.74 indicating a strengthening dollar. Also, the 10-year Treasury yield decreased slightly to 4.569%. Notably, BTC price usually moves in opposite to DXY and US Treasury yields.
3. Crypto Market Crash: $1 Billion In Bitcoin, ETH, XRP and Crypto Liquidated
Coinglass data indicates over $800 million in crypto liquidations, with 290K traders liquidated in the last 24 hours. The largest single liquidation order of BTCUSDT valued at $98.46 million happened on crypto exchange HTX.
Nearly $900 million long and $100 million short positions were liquidated, with BTC, ETH, SOL, DOGE, XRP, UNI and ADA are leading the liquidations. In the last 12 hours, $800 million in longs were liquidated causing the crypto market crash.
Source: Coinglass
4. $9.5 Billion in Bitcoin and Ethereum Options Expiry
As per Deribit, 78K BTC options with a notional value of $7.7 billion are set to expire on Friday, with a put-call ratio of 0.70. The max pain point is $98,000, indicating high odds of further crash. The monthly BTC options expiry always recorded high volatility and shift changes in market sentiments.
Moreover, 565K ETH options with a notional value of almost $1.8 billion are set to expire, with a put-call ratio of 0.41. The max pain point is $3,400, which is higher than the current price of $3,073. Traders must keep an eye on drastic changes in trading volumes as the crypto market crash can result in a further fall in ETH prices.
Source: Deribit
5. On-Chain Data Shows Temporary Bearish Signs
BTC on-chain data signals weakness as the 30-day MVRV ratio metric reaches the danger zone. BTC price is more susceptible to fall and consolidate as MVRV ratio rises, indicating trades that it’s time to book profits.
Moreover, on-chain analyst Axel Adler Jr revealed the Taker order bearish pressure stands at $1.6 billion over the past 24 hours, which is an extremely high level for the past month. He added that the last time it was higher at $1.8 billion in early January.
Source: Axel Adler Jr
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