Why Is The Crypto Market Down Today?

Written by

Eddie Mitchell

Cryptocurrency Writer

Market observers are eagerly waiting to see if the crypto market will continue to decline following a particularly bearish period that has seen hundreds of billions wiped off the total crypto market cap today, 22 January 2024.

Back in bear territory?

In just less than two weeks, the global cryptocurrency market has shed around $200billion from its market capitalization. Today, the crypto market cap sits at just under $1.7trillion down from over $1.8bn.

14-day CoinGecko global market cap
Last year ended on a pretty good note for crypto, with Bitcoin (BTC), Ethereum (ETH), and Solana (SOL) relishing in some solid price gains throughout Q4 2023. With anticipation mounting around the potential approval of the first Bitcoin exchange-traded funds (ETFs) in the United States, speculators were gearing up for a bullish start to 2024.

Seemingly, this hasn’t come to be, with market decline once again placing pressure on the bulls, the bears may be looking to squeeze BTC under $40k before any prolonged period of upward momentum.


Global 24-hour trading volumes have also taken a huge dip in that same period, spiralling from lofty highs just shy of $150bn to under $50bn today. 

Post-ETF correction

As shown in the graph below, investors weren’t wrong about the landmark decision being a boon for BTC, which saw the most significant price gains in the lead-up to the decision date.

BTC peaked at just over $48k when the US Securities and Exchange Commission (SEC) approved spot BTC ETFs on 11 January 2024, though it failed to maintain this trajectory and break past the $50k resistance bar and promptly fell to the support line of $40k, where it presently hovers above at $41,127 a piece.

Naturally, the SEC decision caused some fresh money to enter into the market but it seems to have fallen short of the bull’s expectations, and there is perhaps more of a bearish sentiment in the market than previously thought. Regardless, the question remains as to how low will the correction go.

Stablecoin accumulation

As we have previously reported, there has been a sustained increase in the amount of stablecoin inflow, raising the supply of stablecoins by significant amounts, as evidenced by the “aggregated market cap net position change” indicator.

CryptoQuant Stablecoin Supply Ratio (SSR)
Analysis of this indicator suggests that investors are hedging their crypto into stablecoins to weather a potentially volatile period. In short, the lower the Bitcoin: Stablecoin Supply Ratio (SSR) number is the stronger the buying momentum is for BTC, and this may hint at bullish conditions to come.

Terra Luna (LUNC)

These recent market pains have perhaps been compounded by the recent developments with the beleaguered Terraform Labs, the firm responsible for the crypto market crash in May 2022. 

This was the result of the firm’s co-founder's alleged involvement in a $40bn fraud when algorithmic stablecoin TerraUSD (TUSD) lost its 1:1 peg and the platform crypto Terra (LUNA) also collapsed.

Pair those developments with our recent report on the matter, and you have a perfect storm for bearish investors. The Singapore-based firm has now filed for Chapter 11 bankruptcy just as FTX did in November 2023, and its coins are shedding hundreds of millions in market cap.

Terra (LUNA) and Luna Classic (LUNC) are both experiencing a sharp decline in both price and market capitalization, with both losing a combined $600m approximately since 23 December 2023.

LUNC daily chart
Efforts to restore some balance to the network resulted in it being split into two and LUNC being launched as Luna 2.0 following the incident. Cryptocurrency exchanges have been slowly and steadily delisting LUNC pairings to protect traders, and rumors are now circulating that major exchange, Crypto.com, is the next in line to delist the token.