Cryptocurrency Market Suffers Losses as Investors Grapple with Fears of Hawkish Fed Policy

The global cryptocurrency market witnessed a considerable setback on Tuesday as investors grappled with fears of a hawkish Federal Reserve policy.

Major cryptocurrency prices fell sharply on Tuesday as traders reacted negatively to upbeat US jobs data, which triggered liquidations of over $500 million. The global cryptocurrency market cap fell by 6% over the last 24 hours to $3.2 trillion.

Bitcoin (BTC) price today plunged to as low as $97,000, marking a 4% drop from the $102,750 rally after US Fed VP Barr's resignation on Monday. The promising start to 2025 for Bitcoin saw a quick end as BTC prices fell sharply.

After rising to the $102,750 level on Monday following the news of US Fed VP Michael Barr's resignation, Bitcoin prices began a steep descent. Countering the initial bullish sentiment, traders reacted negatively to the strong US jobs data, which led to massive liquidations in the crypto market. As a result, BTC prices fell sharply, dropping as low as $97,000 with minimal support at lower levels.

Other major crypto prices also fell sharply on Tuesday, with ETH prices dropping over 5%. XRP prices also fell significantly, dropping by over 5% to trade below the $2 mark. Meme coins like DOGE, SHIB, and Pepe experienced even steeper declines.

The global crypto market cap saw outflows of over $220 billion in the last 24 hours, adding to the bearish market sentiment. Over-leveraged bulls were caught off guard by the massive market liquidation, which occurred as the crypto market recovered from its initial losses.

Highlighting the sharp sell-off in the cryptocurrency market, total crypto liquidations amounted to $500 million, a significant portion of which was in the ETH and BTC markets. As the US jobs data pointed toward a hawkish Federal Reserve policy, the market sell-off gained momentum.

Coinbase secured an important legal breakthrough in its battle with the US Securities and Exchange Commission (SEC) over the classification of digital assets. The financial regulatory body had planned to sue Coinbase for allegedly offering unregistered securities through its Lend program. However, a federal judge in New Jersey dismissed the SEC's attempt to block seven digital asset transactions from the exchange platform.

In related news, Rostin Behnam, Chair of the US Commodity Futures Trading Commission (CFTC), announced his resignation, effective January 20. This marks the end of his tenure, which was characterized by rigorous enforcement actions in the digital asset space. Behnam joined the CFTC in 2017 and played a key role in shaping the regulatory approach to cryptocurrencies.

On a positive note, Pierre Poilievre, leader of Canada's Conservative party, emerged as a strong proponent of cryptocurrency and decentralized finance (DeFi). During a recent campaign stop in Toronto, Poilievre expressed his support for digital currencies and DeFi, highlighting their potential to empower individuals.