Hold my bear: Why the crypto market suddenly fell, and how long will the dive continue?

The crypto market is in the red zone. Again. Thus, the value of many digital assets fell over the past 24 hours. According to CoinMarketCap, in the top 100 by market capitalization, losses were up to 19%.

And both little-known tokens like IOTA (-7.28% — from $0.2357 to $0.2197) and THORChain (-11,18% — from $1.8678 to $1.68) suffered, along with more popular coins like Solana (-6,15% — from $24.5 to $23.08) or Axie Infinity (-10,38% — from $12.23 to $11.08).

Why is crypto down today?

According to the CEO and co-founder of crypto investment platform Mudrex, Edul Patel, the fall in the value of crypto-assets followed the news that the U.S. will publish data on GDP Gross domestic product figures on Thursday, January 25.

It is not yet known how the market will behave, and it can either fall even lower or rise. It depends on what the numbers will be. From past data, we can see that if GDP goes down, Bitcoin goes up, and conversely. And BTC tends to pull other assets with it.

• According to a report dated July 28, 2022, quarterly U.S. GDP growth fell 0,9%. At the same time, Bitcoin grew by more than 7% (from $21.244 to $22.933).
• In the second quarter of 2020, U.S. GDP fell by a whopping 32,9%. During the same period, Bitcoin rose from $5.925 to $9.140 (+54,26%) and, after the news, from $10.912 to $11.099 (+1,71%).

So far, after the growth that was observed almost throughout January and was triggered by a decrease in unemployment (from 3,7% to 3,5%) and inflation in the U.S. (from 7,1% to 6,5%), the market has sunk while waiting for tomorrow’s data.

Main cryptocurrencies such as Bitcoin and Ethereum did not fall much.

• Bitcoin dropped again after breaking the $23K bar. During the day, the value of the asset declined 1,37% — from $23.035 to $22.724.

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• Ethereum suffered slightly more, showing a decrease in value by 4,35% over the day — from $1.630 to $1.562.

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Top losers

These are the coins that at the time of writing dropped in value the most:

• Threshold (T). It fell by 16,87% from $0.05737 to $0.04909.
• Lido DAO (LDO). During the last 24 hours the value of token fell from $2.8163 to $2.43 — by 15,9%.      
• Flow (FLOW). The value of the coin dropped 9,75%, from $1.1963 to $1.09.
• Chiliz (CHZ). The cryptocurrency fell from $0.1455 to $0.1339 — down 8,66%.
• Convex Finance. The token fell from $5.4836 to $5.07 — down 8,16% in 24 hours.

However, not all cryptocurrencies fell. The best in growth was Aptos. During the last 24 hours, the asset grew by an impressive 24,01% from $12.87 to $15.96, and by 361,71% since the beginning of the year (on January 1, the token was worth $3.4567). Such figures are associated with the growing popularity of APT due to NFT based on the Aptos blockchain. Apparently, the coin is so strong now that even the general market sentiment cannot affect its value.

Future predictions

Which way the market will go in the near future will be clear after the announcement of the US GDP data. However, market participants, apparently, are set for its growth.

Unocoin exchange co-founder and CEO Sathvik Vishwanath explained that the bullish trend before the current downturn is explained by the fact that investors are hoarding in anticipation of another rise in cryptocurrencies and a falling U.S. dollar.

As for the main cryptocurrency, according to technical analysis, if Bitcoin breaks through the $23.133 resistance level, its value could rise to $25K. For now, the token is circling around the $22.5K support-resistance level.

Popular cryptocurrency analyst KALEO believes Bitcoin will hit $30K soon. So, who knows?

What else affects the decline in the value of cryptocurrencies?

The cryptocurrency market is very volatile, so such forecasting methods as technical analysis are often incorrect. The fact is that different events affect the value of assets, and it is important to understand which ones. Here are some of them:

• Crypto influencers impact. A good example would be Tesla CEO Ilon Musk’s influence on Dogecoin. Every time a businessman mentions the token, its value changes. The last time it became known that the head of SpaceX might leave his Twitter post, the price of the asset fell 10,09% — from $0.07865 to $0.07144. Current price is $0.08358.
• Lack of liquidity. Just like FTX, which went bankrupt due to lack of liquidity. The exchange’s native token FTT fell more than 93,27% in 24 hours — $22.14 to $1.4901. Current price is $1.9.
• Regulators impact. On January 23, it became known that U.S. regulators are investigating Binance for possible insider trading and market manipulation. During the day, the value of the exchange’s native BNB token fell 3,49% — from $310.56 to $300.09. Current price is $298.93.
• Crypto security breaches. Users lose their savings and faith in the token, so its value drops. On December 2, the Anrk protocol was hacked. As a result of the attack, the hacker stole at least $15M. After that, the value of the ANRK native token began to fall — from $0.02224 on December 2 to $0.01529 by the beginning of the year (-45,45%). After that, the value of tokens began to grow on the background of the general growth of the market and settlement of the situation with hacking. The current price of ANRK is $0.92632.

Do your own research [DYOR] on anything that affects the value. Investor and trader CryptoCat notes that Ethereum was predicted to outperform Bitcoin in early January, but it has already fallen 12% since January 11.

“In case it wasn’t clear by now nobody knows what they are talking about, DYOR and make your own decisions,” he said.

Do you agree? We do!