Bitcoin and other crypto assets decline – Lack of momentum despite stable market environment

The major cryptocurrencies are losing momentum, while Bitcoin, despite calmer global markets, is struggling to stay above the $90,000 mark. ETH, SOL, and ADA are declining, signaling broader market weakness in the crypto sector, which remains characterized by volatility.

Price Decline of Major Cryptocurrencies – ETH, SOL, and ADA in the Red

Bitcoin is currently trading at around $88,350, well below the targeted $90,000 level. The largest cryptocurrency experienced a 1.09% decrease in the last 24 hours after briefly falling below $98,000 earlier this week, triggering massive liquidations of over $1 billion.

The situation is no better for other leading cryptocurrencies: Ethereum dropped to about $2,960, while Solana is at $123.66, and Cardano corrected to $0.35. XRP also showed weakness with a price of $1.89, despite assets initially expected to benefit from a weaker US dollar. Most large-cap tokens saw declines between 7% and 12% last week — an indication of how fragile market sentiment remains despite improved conditions in the stock and forex markets.

Liquidations and Volatility Slow Down Rally

The massive sell-off at the start of the week, triggered by excessive leverage, has left deep scars. While liquidations have removed excess leverage from the market, prices have been consolidating rather than rebounding significantly. This underscores the fundamental fragility of the crypto market, which does not behave like a defensive asset but rather acts as a volatility amplifier.

Wenny Cai, Chief Operating Officer at Synfutures, summarizes the situation: “Crypto continues to be traded more as a volatility amplifier than as a defensive asset. The liquidation wave has cleaned up excess leverage, but uncertainties regarding policy, financing costs, and regulation cause investors to act selectively rather than aggressively.” This cautious stance is also reflected in trading patterns — instead of aggressive buy signals, we see more of a wait-and-see market dynamic.

Macro Economic Background: Why Crypto Reacts Differently

While Asian stock markets climbed to record highs and the MSCI Asia Pacific Index hit a new all-time high, crypto prices lag behind. Emerging market equities posted strong gains, and US stock futures indicate moderate gains ahead of the New York stock market open. The US dollar remained weak after its sharp decline at the start of the week, which would normally support commodities and Bitcoin — gold is trading near $5,000 per ounce.

However, this macroeconomic environment, which should be favorable for risk assets, did not lead to a recovery in cryptocurrencies. Market participants continue to treat digital assets as highly volatile extensions of global risk appetite, not as an independent asset class. They react more strongly to changes in the dollar, bonds, and stock markets than to crypto-specific developments. This decoupling explains why Bitcoin and other digital assets do not benefit proportionally from positive stock market signals.

Market Psychology and Lack of Confidence

An interesting contrast is seen with XRP: while the cryptocurrency lost about 4% in January, US-listed spot XRP ETFs attracted net inflows of $91.72 million during this period. This indicates differing investor behaviors — traditional investors favor structured ETF products, while spot traders are avoiding the market.

In contrast, the Pudgy Penguins story presents an alternative NFT development: the project successfully positions itself as a multi-vertical consumer IP platform with over $13 million in retail sales and over one million units sold. But such niche success stories cannot reverse the broader market trend.

Outlook: Waiting in Line Instead of Rally

The crypto market is currently in a holding pattern. As long as investors await clearer signals from stock markets, monetary policy, and financing conditions, Bitcoin is likely to remain below $90,000. Confidence is only slowly recovering after a mixed start to the year.

While Asian trading hours showed relative stability, market participants will watch whether the strength of global stock markets and emerging markets will lift the crypto sector or if volatility continues to dominate. The coming days will be crucial in determining whether Bitcoin regains its momentum or if the correction phase persists.