The cryptocurrency market decreased by 0.73% to reach $2.79 trillion in 24 hours, mainly due to the nomination of a hawkish Federal Reserve governor that led to a broad rise in the value of the US dollar. This resulted in a historic sell-off in associated assets like gold and silver, as capital shifted away from risk-sensitive digital assets.
Main reason: the nomination of a hawkish Federal Reserve governor. President Trump's choice of Kevin Warsh, known for his dollar-strengthening stance and anti-inflation measures, led to a sharp rise in the U.S. dollar and a historic collapse in precious metals, negatively affecting the cryptocurrency market.
Secondary reasons: a Bitcoin-led decline and weak performance by Ethereum. Bitcoin's dominance remains high at 59.25%, leading the market downward, while Ethereum and major top-tier tokens declined more sharply due to selling pressures linked to macroeconomic factors.
Short-term market outlook: Short-term trend: bearish pressure. If the dollar continues to strengthen and Bitcoin breaks the $82,000 support, a test of the $78,000 level is expected. A recovery above $86,400 may indicate stabilization, which is linked to upcoming Federal Reserve statements and ETF flow data.
Detailed analysis
1. The nomination of a hawkish Federal Reserve governor raises the dollar and causes a collapse in metals.
Overview: On January 30, President Trump nominated Kevin Warsh, known for his hawkish stance on inflation, to head the Federal Reserve. This led to a sharp rise in the U.S. dollar and a historic collapse in gold (-12%) and silver (-36%) CryptoNews, as traders began to anticipate a more hawkish monetary policy. Cryptocurrencies, which rely on dollar liquidity, were affected by this trend.
What this means: This reflects a macroeconomic repricing move, where cryptocurrencies acted as an asset correlated with traditional hedges against inflation. A rising dollar diminishes the appeal of dollar-denominated speculative assets.
What to watch: more statements from the Federal Reserve and the continued strength of the U.S. dollar (DXY) above the 104.5 level.
2. Bitcoin leads the decline and Ethereum drops further
Overview: Bitcoin's decline over 24 hours reflects the general market trend, with its dominance holding steady at around 59.25%. In contrast, the Ethereum system dropped by 3.48% during the same period, underperforming the market, as seen in categories like the top tier (-0.71%) and Ethereum (-3.48%).
What this means: the selling was broad-based and not limited to just one reason. The high correlation between major assets intensified the decline, with particular weakness in Ethereum possibly due to its greater sensitivity to macroeconomic factors.
What to watch: ETH/BTC ratio breaking below 0.032, indicating continued weakness in alternative coins.
3. Short-term market outlook
Overview: The immediate driver of the market is the narrative surrounding the Federal Reserve. Any new statements from board officials and the ETF flow report for Bitcoin in the U.S. should be monitored. Technically, the $82,000 support for Bitcoin is critical; breaking this level could target $78,000. A swift recovery above $86,400 (the neckline of the head and shoulders pattern) would negate the bearish scenario.
What this means: The market trend in the coming days depends on the continued rise of the dollar and whether institutional flows through ETFs will show signs ....