Bitcoin and Ethereum plummet, market volatility influenced by regulatory uncertainty and macroeconomic variables

Bitcoin(BTC) prices are showing a sharp decline, currently trading at 13,655,000 KRW. This represents a 24-hour decline of 2.65%. On the same day, former President Donald Trump mentioned the possibility of imposing comprehensive tariffs on Europe, causing significant market turbulence, with BTC experiencing a drop of over $4,000 at one point. As a result, approximately $500 million in leveraged long positions were liquidated within just 2 hours.

Ethereum(ETH) also followed Bitcoin’s downward trend, currently trading near 4.73 million KRW, down 3.18% over 24 hours. As the U.S. Senate’s discussion on the (CLARITY Act) was delayed, regulatory uncertainty has resurfaced, putting pressure on the overall market.

Nevertheless, institutional investors continue to participate in the market. As of mid-January this year, institutional investors had purchased a total of 30,000 BTC, roughly five times the mining output during the same period. Notably, in January alone, 110,000 BTC were accumulated by long-term holders, marking the largest monthly increase since 2022.

On the other hand, as interest in privacy coins grows, Dash(DASH) has risen by 8.54% over 24 hours, showing a stark contrast. This indicates that some funds are flowing from mainstream cryptocurrencies into the altcoin sector.

XRP and Solana(SOL) also could not avoid the downward trend. Ripple is currently trading at 2,899 KRW, down 4.45%, and despite the end of the SEC lawsuit, selling pressure persists due to regulatory uncertainties. Solana is trading at 197,000 KRW, and although its DeFi ecosystem is expanding, it remains affected by the overall market decline.

Recently, concerns about the U.S. cryptocurrency regulatory framework have risen after Coinbase withdrew support for the (CLARITY Act), and the Senate Banking Committee’s scheduled hearings were canceled. However, industry insiders indicate that informal negotiations are still ongoing.

On the macroeconomic front, investors should stay alert. The Federal Reserve is expected to keep the benchmark interest rate unchanged in January. Analysts believe that upcoming PCE(Personal Consumption Expenditures) data could influence Bitcoin’s price direction.

Experts comment: “The current adjustment is a result of macroeconomic uncertainty intertwined with regulatory risks,” and note that “continued inflows from institutional investors could serve as a positive signal in the medium to long term.”

Given the increasing correlation between the cryptocurrency market and traditional financial markets, investors should remain sensitive to inflation indicators and changes in central bank policies and prepare accordingly.

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