Crypto Market Crash: Traders Face $500M Liquidations as BTC, XRP, and PEPE Plunge on Hawkish Fed Signals
The cryptocurrency market experienced a sharp downturn, wiping out 6% of its value within 24 hours and dragging the total market cap down to $3.2 trillion. Traders faced over $500 million in liquidations as upbeat U.S. jobs data reignited fears of a hawkish Federal Reserve stance.
Key Highlights
- The crypto market shed 6%, losing $220 billion in value as macroeconomic concerns triggered massive sell-offs.
- Bitcoin (BTC) fell 4%, dipping to $97,000, while altcoins like XRP and PEPE suffered deeper losses.
- Futures traders recorded $500 million in liquidations as bearish sentiment prevailed following stronger-than-expected U.S. labor data.
- Memecoins such as DOGE, SHIB, and PEPE saw double-digit declines amid increased volatility.
Bitcoin Update: BTC Plunges to $97K Amid Market Jitters
Bitcoin’s bullish start to 2025 came to an abrupt halt as prices dropped 6%, falling from $102,750 to $97,000 before stabilizing.
The decline followed $987 million ETF inflows recorded on January 6, spurred by U.S. Fed Vice Chair Michael Barr’s resignation on Monday. Despite initial optimism, renewed fears of prolonged monetary tightening dampened investor sentiment, contributing to the sell-off.
Altcoin Update: XRP, ADA, and AVAX Surrender Gains on Fed Concerns
Altcoins mirrored Bitcoin’s losses, with mega-cap tokens such as XRP, Cardano (ADA), and Avalanche (AVAX) tumbling as risk-off sentiment took hold.
- Avalanche (AVAX) suffered an 11% drop, sliding from its 7-day high of $45 to $33 as bearish pressure intensified.
- Chainlink (LINK) fell 10.4%, briefly testing the $20 support level amid heavy liquidations.
- Ripple (XRP) declined 7%, driven by profit-taking from long-term holders and broader market weakness.
Liquidations Surge as Traders Lose $500M in Crypto Crash
The broader crypto market witnessed massive liquidations exceeding $500 million, reflecting panic-driven selling.
Bitcoin (BTC) led the losses with $8.16 million in liquidations, followed closely by Ethereum (ETH) at $4.93 million. Altcoins like Dogecoin (DOGE) and Solana (SOL) also experienced significant liquidations of $3.86 million and $3.72 million, respectively.
According to market data, 146,478 traders were liquidated within 24 hours, with the largest single liquidation order—worth $11.94 million—occurring on Binance’s ETH/USDT pair.
The downturn was amplified by comments from Fed Chair Jerome Powell, who hinted at fewer rate cuts during the Q1 2025 cycle. Additionally, hotter-than-expected JOLTs job openings data raised concerns about prolonged monetary tightening, further eroding investor confidence.
Market sentiment remains cautious as investors await further developments, including Donald Trump’s January 20 inauguration, which could introduce policy changes and potential market catalysts.
Crypto Industry News Updates
1. Coinbase Wins Legal Appeal in SEC Case
Coinbase scored a significant legal victory in its ongoing dispute with the U.S. Securities and Exchange Commission (SEC).
Judge Katherine Polk Failla of the Southern District of New York granted Coinbase an interlocutory appeal, enabling the exchange to challenge SEC claims in the Second Circuit Court of Appeals.
The SEC alleges that Coinbase operates as an unregistered exchange, broker-dealer, and offers unregistered securities through its staking services.
This ruling temporarily halts district court proceedings while the appeal is reviewed, potentially setting a precedent for regulatory clarity in the crypto sector.
2. CFTC Chair Rostin Behnam Resigns, Calls for Stricter Crypto Oversight
Rostin Behnam, Chair of the U.S. Commodity Futures Trading Commission (CFTC), announced his resignation effective January 20.
Behnam’s four-year tenure focused on aggressive enforcement actions in the crypto space, including a $4.3 billion settlement with Binance for operating an unlicensed derivatives platform in the U.S.
His resignation reignites debates around crypto regulations, with Behnam emphasizing the need for stronger oversight to address growing regulatory gaps in the industry.
3. Canadian PM Front-Runner Pierre Poilievre Backs Crypto and DeFi
Canada’s Conservative Party leader Pierre Poilievre, the frontrunner for Prime Minister after Justin Trudeau’s resignation, has emerged as a vocal supporter of cryptocurrency and decentralized finance (DeFi).
Poilievre opposes central bank digital currencies (CBDCs) and advocates treating crypto assets as commodities for taxation purposes.
His policy platform promotes favorable regulations for blockchain companies and positions crypto as a hedge against economic instability.
Poilievre, a known investor in the Purpose Bitcoin ETF, has introduced Bill C-400 to regulate CBDCs while preserving Canadians’ rights to use Bitcoin and other digital assets.
Outlook: Will the Crypto Market Recover?
The cryptocurrency market’s sharp losses highlight its sensitivity to macroeconomic events and regulatory changes.
While upcoming events, such as Trump’s inauguration and policy updates, could provide short-term relief, the market’s longer-term trajectory will likely depend on Federal Reserve decisions and economic indicators.
Investors are advised to monitor regulatory developments and macroeconomic data closely as markets adjust to evolving conditions.
