Many analysts have focused on Bitcoin or individual altcoins, but the total value of the cryptocurrency market is approaching an important threshold in January.
Signs of reduced liquidity show that this structure is now very sensitive.
The trading volume for cryptocurrencies is decreasing as investors withdraw their money.
According to Newhedge, the total trading volume on centralized exchanges reached 1,118 trillion USD in January. Binance accounted for over 490 billion USD of this amount.
What stands out is that if no strong upturn occurs in January, this will be the lowest level since July last year. The decrease in trading volume clearly shows that investors have become more cautious.
Due to their concerns, investors hesitate to buy, even though many altcoins are still 70–90% below previous peaks.
Another dataset from CryptoQuant provides more insight. Retail Investor Demand measures small-scale transactions on the blockchain (under 10,000 USD). It has decreased significantly since August last year.
Analysts Caueconomy say that the risk of a possible shutdown of the US government and concerns about the yen carry trade have made investors more cautious. Therefore, trading has decreased, as have new investments.
"A strong recovery requires better market sentiment and more participation from retail investors on the blockchain," says Caueconomy according to CryptoQuant.
Investors are now not only cautious about where they place their capital — they also seem to be leaving the market entirely. Data on stablecoins show this change.
CryptoQuant shows that the total market value of ERC-20 stablecoins has fallen in January. The reserve of stablecoins on exchanges has also decreased significantly.
The total amount of stablecoins on ERC-20 and the amount held on exchanges indicates capital that is "waiting" in the cryptocurrency market. When both of these levels drop simultaneously, it suggests that money is leaving the market instead of just being moved around.
A new BeInCrypto report shows that if new liquidity does not materialize, Bitcoin could fall below 70,000 USD.
How is the Market Cap structure threatened?
The total value of the entire cryptocurrency market fell below 3 trillion USD in January. Several analysts have said that the support level around 2.86 trillion USD is important. If the market goes below this support, the value could drop further.
Data from TradingView shows that the value is now approaching a trend line that has held since 2024. If the market falls below this trend line, it could trigger a decline similar to 2022.
When trading volume decreases and investors leave the market, it may become more likely that this trend line will break.
But the market is now entering a week of significant macroeconomic events that could change the development. The US dollar has fallen to its lowest level in four years, largely due to expectations of interest rate cuts from the Federal Reserve and new uncertainty regarding trade policy.
Historically, a weaker dollar has benefited assets like cryptocurrencies, as it increases liquidity and makes USD-based assets more attractive to foreign investors. If this continues, it could reverse the capital outflow we see now.
But the path forward is still uncertain. For the market to recover for a long time, it needs not only favorable macroeconomic conditions but also for retail investors to come back and new inflows of stablecoins. None of this has happened yet.
The coming days will be crucial. If the support level of 2.86 trillion USD holds and the macroeconomy remains good, the market could stabilize. But if trading volume continues to decrease and investors keep withdrawing money, we may see a deeper decline.