Why Have Bitcoin, Ethereum, and XRP Prices Declined? ETF Movements, Fed Rates, and More

The cryptocurrency market experienced a significant decline of $120 billion this week following a halt in January's recovery. Notably, Bitcoin's rise, previously supported by substantial ETF inflows, reversed midway through the week, leading to a notable drop in its price. The anticipated Federal Reserve meeting and the possibility of a rate pause have further influenced market emotions, creating additional downward pressure on major altcoins like XRP and Ethereum.

Key Takeaways

The crypto market lost approximately $120 billion this week after a promising recovery in January faltered.
Bitcoin's price fell over $4,500, declining from $94,500 to $90,000.
Anticipations of a Federal Reserve rate pause are affecting market sentiments.
XRP saw a significant price drop of 14%, dropping from $2.4 to $2.
Ethereum also fell about 6%, decreasing from $3,300 to $3,000, with future price action dependent on certain key support levels.

Overview of the Current Market

The cryptocurrency market has recently taken a hit, losing around $120 billion this week after a preliminary recovery in January came to an abrupt stop. Bitcoin, which had seen a boost from more than $1 billion in ETF inflows, hit a snag mid-week.

According to data from SoSo Value, U.S. Spot ETFs experienced substantial outflows totaling $729 million on Tuesday and Wednesday.

Bitcoin Ethereum XRP Source: SoSo Value

During this period, Bitcoin's price dropped significantly, over $4,500, moving from $94,500 down to $90,000 on market charts.

Expectations for Fed Rate Pause

Market sentiment worsened due to expectations surrounding a potential pause in Federal Reserve interest rates at the upcoming meeting on 29 January. Recently, the odds of such a pause increased by 4%, reaching 86.7%.

Upcoming jobs and inflation reports set for 9 and 14 January could further influence the outlook on rate cuts and sway investor confidence in riskier assets.

Bitcoin Ethereum XRP Source: CME FedWatch

However, the current outlook for rates at 3.50%-3.75% is placing additional downward pressure on the cryptocurrency market. While Bitcoin fell by 5%, many altcoins suffered even larger declines during the mid-week drop.

XRP and Ethereum Experience Price Drops

For instance, XRP plunged by 14%, dropping from $2.4 to $2, effectively reversing nearly half of its significant gains made in January.

Bitcoin Ethereum XRP Source: XRP/USDT, TradingView

Short-term bulls may look toward the $2 support zone as a potential reversal point since it aligns with the 50-day Moving Average (MA), which could bolster short-term bullish momentum if maintained. Conversely, a decline below this level could lead XRP’s price closer to recent lows around $1.80. It’s noteworthy that the altcoin saw considerable whale interest during early 2026, suggesting a potential for rapid recovery if overall market sentiment improves.

In a similar fashion, Ethereum’s [ETH] price also dipped approximately 6%, moving from $3,300 down to $3,000. In December, the price action formed a symmetric triangle pattern that could break in either direction. Should a bullish breakout occur, the immediate price target would be around $3,600.

Ethereum Ripple XRP Source: ETH/USDT, TradingView

However, a fall below the $2.9k mark would suggest a bearish breakout, likely leading to further price drops.

Despite the recent downturn, it's worth mentioning that the altcoin season index has improved, rising from a reading of 25 to a neutral level of 57 as of the latest report. This improvement hints at a significant rebound potential for the altcoin sector in January, despite the current cooling-off period.

Conclusion

In summary, the recent downturn in major cryptocurrencies like Bitcoin, Ethereum, and XRP appears to stem from a combination of ETF outflows and shifting expectations regarding Federal Reserve interest rates. As the market navigates these changes, investor sentiment remains crucial for future price movements.