A $200 billion market capitalization plummet sent investors reeling in the 24 hours between January 29 and January 30 as the total valuation of cryptocurrencies crashed from $2.96 trillion to $2.76 trillion.
The latest collapse comes after a period of volatility and frequent downward movements that characterized the last days of 2026’s first month. The latest drop came as various risk factors have been accumulating at an accelerated pace.
Why cryptocurrencies are down today
In the world of finance, the struggle between the Federal Reserve Chair Jerome Powell and President Donald Trump appears to be nearing its January culmination as the central banker is facing a criminal investigation, and the commander-in-chief is expected to name the likely next head of America’s national bank in the first week of February.
Also on the domestic front, an increasingly likely government shutdown on January 31 has been weighing heavily on risk assets. Specifically, the U.S. Congress is expected to once again cut funding for the Federal Government over disagreements pertaining to the funding of the United States Immigration and Customs Enforcement (ICE).
The legislative spat came after what some lawyers described as state-sanctioned murder in the form of the killing of a protester and a Veterans Affairs (VA) nurse in Minneapolis.
International risks have also been mounting. While President Trump’s latest escalation of the 60-year-long blockade of Cuba has drawn much attention on the evening of January 29, the more long-term – and likely more impactful – development has been the military buildup many suspect is the lead-up to another attack on Iran.
Risk assets are especially susceptible to conflict in the Persian Gulf, given how critical the Strait of Hormuz – a narrow waterway many believe Iran is easily able to close – is for the global oil supply and, by extension, the global economy.
Latest crypto crash deepens the late 2025 downturn
Elsewhere, while the recent domestic and international developments have, without much doubt, helped trigger the latest downturn, it fits within a broader pattern seen in the cryptocurrency market since late 2025.
Specifically, after many digital assets – spearheaded by Bitcoin (BTC) at approximately $125,000 – hit record highs in October, an overall downtrend has taken over the sector.
Indeed, while the decline has been relatively slow, multiple blockchain analysts have concluded that the traditional 4-year cycle may now be defunct. For example, the popular on-chain expert on X, Ali Martinez, estimated that Bitcoin could hit its cycle low – possibly near $38,000 – as soon as October 2026.
Bitcoin erases $110 billion in a day
Looking at BTC in particular, the bearish forecasts are appearing increasingly likely. Out of the $200 billion erased from the cryptocurrency market, Bitcoin accounts for some $110 billion, considering its valuation dropped from approximately $1.76 trillion to about $1.65 trillion within just 24 hours.
The movement – which led BTC to its press time price of $82,301 – means the world’s premier cryptocurrency fell under the previously-reliable support zone near $85,000, constituted by the 100-day moving average (MA).
Bitcoin’s next move could be determined by whether it moves toward its next support just above $80,000 or manages a breakout above the nearest resistance just past $88,000.
The uncertainty is exacerbated by the likely persistence of external risk factors that are likely to continue generating headwinds – and two possible shocks in the weekend of January 31 and February 1 – and the tailwinds from the fact that BTC might now be seen as an attractive buy due to its lowered price.
Featured image via Shutterstock
