Understanding Why the Crypto Market Is Going Down—From Macro Triggers to Market Mechanics

The crypto market is under intense pressure, and the current downturn offers important lessons about how global forces shape digital asset prices. As of late January 2026, Bitcoin has declined to $84.72K (down 5.22% in 24 hours), while Ethereum, XRP, and Dogecoin are all trading lower—dropping between 5% and 6% over the same period. The total crypto market cap has contracted significantly from its recent highs. But here’s what many traders miss: this isn’t fundamentally a story about blockchain weakness or failed innovation. It’s a story about why the crypto market is going down due to external macro forces that caught most participants off guard.

Geopolitics and Trade War Anxiety Drive the Downturn

The immediate trigger had nothing to do with crypto fundamentals. Instead, reports emerged that the European Union is preparing up to $100 billion in retaliatory measures against the United States, following renewed trade threats from President Donald Trump tied to Greenland. This announcement immediately revived fears of a fresh trade war cycle—something global markets had largely stopped pricing in.

Once U.S. futures opened in negative territory, risk assets across the board began to slide. Crypto followed suit, and quickly. Bitcoin fell approximately $3,600 in a compressed window, while roughly $130 billion was erased from the total crypto market cap in just 90 minutes. This wasn’t gradual profit-taking. It was a sharp repricing of geopolitical and economic risk in real time.

The larger context matters: Trump’s announcement of 10% tariffs on EU imports, with threats rising to 25% by June, changed how traders view near-term economic stability. For crypto investors, these moves have no direct regulatory component, yet they matter tremendously because crypto remains deeply tied to broader risk sentiment in global markets.

How Leverage Amplified the Price Collapse

While geopolitical anxiety lit the fuse, leverage did the real damage—turning a manageable correction into a sharp selloff. According to CoinGlass data, $124.32 million in Bitcoin long positions were liquidated over 24 hours, representing a dramatic 2,615% spike compared to the prior day. That kind of jump tells you how extended and risky positioning had become heading into the move.

At the same time, derivatives open interest surged by nearly 27% to $688 billion, revealing that traders were heavily exposed on the long side before the downturn began. Once Bitcoin started slipping below key levels, forced selling kicked in. Liquidations triggered additional selling pressure, which triggered further liquidations. This feedback loop accelerated the decline far beyond what the initial macro news alone would have caused.

This is why the crypto market is going down so sharply—not just because of external factors, but because market structure itself amplified the move. When leverage gets flushed out of the system, speed matters more than direction.

The $92.5K Level: What Happens Next

From a technical perspective, $92.5K is now the critical level to monitor. If Bitcoin holds above that zone, the current move can still be classified as a leverage flush and temporary consolidation rather than a genuine trend reversal. If Bitcoin breaks cleanly below $92.5K, however, another estimated $200 million or more in liquidations could trigger, leading to additional mechanical selling.

Buyers have stepped in to defend this support area, but the market remains fragile while volatility stays elevated. The difference between holding and breaking this level could determine whether we see stabilization or further deterioration over the coming days. At current prices near $84.7K, there’s meaningful room between the current price and that support zone—a reality worth monitoring for traders managing risk exposure.

Macro Risk Returns to Center Stage

Beyond the mechanics of liquidations, the bigger story is that macro risk has returned to center stage in how markets price assets. Even though geopolitical tensions and trade policy have nothing directly to do with blockchain technology or crypto regulation, crypto’s performance remains deeply tied to how investors perceive global economic and political stability.

Interestingly, crypto’s correlation with the Nasdaq 100 has turned negative over the past week, sitting near -0.41 on a 7-day basis. This suggests crypto is not simply tracking tech stocks anymore, but reacting more directly to macro uncertainty and broader risk sentiment. In other words, the crypto market is going down because traders are repricing political and economic risk—not because Bitcoin or Ethereum are failing as technologies or investments.

This distinction matters significantly. When macro risk dominates, patience and proper risk management become more valuable than panic selling or revenge trading. Understanding the source of the downturn helps traders distinguish between structural weakness and temporary repricing, which is often the difference between opportune entry points and poorly timed exits.

The current environment serves as a reminder that crypto doesn’t exist in isolation. Global trade policy, geopolitical tensions, and central bank actions all filter through to digital asset prices. Monitoring these macro signals—not just on-chain metrics—remains essential for navigating periods when the broader market is under pressure.