Ethereum was trading at $2,434.30 as of 12:14 local time (17:14 GMT) on Saturday, according to the Investing.com Index, marking a 10.26% daily decline. This represented its steepest one-day percentage drop since October 10, 2025.
The selloff reduced Ethereum’s market capitalization to $298.41 billion, accounting for about 11.08% of the total crypto market. At its peak, Ethereum’s market cap had reached $583.89 billion.
Over the past 24 hours, Ether fluctuated between $2,378.01 and $2,714.59. Weekly performance has also been weak, with Ethereum down 16.31% over the last seven days. Trading volume during the most recent 24-hour period totaled $36.56 billion, representing 25.68% of overall cryptocurrency turnover. Over the past week, prices ranged from $2,378.01 to $3,044.24.
Despite its recent rebound attempts, Ethereum remains 50.88% below its all-time high of $4,955.90, recorded on August 24, 2025.
Elsewhere in crypto markets, Bitcoin was last seen at $79,266.0, down 4.65% on the day. Tether USDt was effectively flat at $0.9990.
Bitcoin’s market capitalization stood at $1.60 trillion, representing 59.35% of the total crypto market, while Tether’s market cap was $185.07 billion, or 6.87% of the overall market value.
Bitcoin, the world’s largest cryptocurrency by market capitalisation, slid 6.53% to $78,719.63 by 12:48 p.m. ET (1748 GMT) on Saturday, extending losses from the previous session.
On Friday, bitcoin touched a low of $81,104 — its weakest level since November 21 — as the U.S. dollar strengthened following the selection of former Federal Reserve Governor Kevin Warsh as the next Fed chair. Investors have voiced concerns that Warsh could pursue tighter liquidity conditions across the financial system.
Warsh has argued for sweeping changes at the central bank and has advocated, among other measures, reducing the size of the Federal Reserve’s balance sheet.
Bitcoin and other digital assets have often benefited from an expanded Fed balance sheet, typically gaining when abundant liquidity supported risk and speculative investments.
Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin, said the Fed’s “oversized balance sheet, coupled with heavy-handed banking regulation,” had effectively trapped liquidity within Wall Street rather than allowing it to flow to the broader economy, contributing to asset bubbles in areas such as bonds, cryptocurrencies, metals and meme stocks.
Ether also dropped sharply, falling 11.76% to $2,387.77 on Saturday afternoon. Cryptocurrencies have struggled to find clear direction since their sharp decline last year, lagging behind strong rallies in gold and equities.
“Sometimes these price corrections can become self-reinforcing,” Jacobsen said, noting that Friday’s sudden sell-off had served as a reminder of market risk. He added that further selling in the coming days was “possible, if not likely.”
Cryptocurrencies are struggling during what had been expected to be a period of strong inflows and supportive regulation under President Donald Trump. Bitcoin, the market leader, has shed about one-third of its value since hitting record highs last October.
The total cryptocurrency market capitalisation dropped by about 5% to $2.82 trillion over the past 24 hours, briefly touching $2.78 trillion twice—its lowest level since April last year. As anticipated, weakness in commodity and equity markets added further pressure to crypto, triggering a sell-off on elevated volumes as traders tightened stop-loss orders after a prolonged period of consolidation. In our worst-case scenario, market cap could fall into the $1.8–2.0 trillion range, corresponding to a 161.8% extension of the initial downside move seen in October–November.
The Crypto Sentiment Index dropped to 16 by Friday, marking its lowest reading in six weeks and a return to extreme fear—a zone the market managed to escape for only two days this week. While such depressed sentiment is often viewed as a buying opportunity, we continue to stress that a more prudent strategy is to wait for a clear exit from extreme fear, helping to reduce the risk of sudden and sharp downside moves.
Bitcoin has fallen 6% over the past 24 hours, briefly dropping to $81K and revisiting the lows seen in late November. The market is now testing the resilience of a support level that previously absorbed heavy selling pressure last year. About $10K lower lies a zone where prior cycle highs from 2021–2022 and the first half of 2024 converge. If that area fails to hold, Bitcoin could slide toward the $52–60K range.
In the near term, however, attention should remain on BTC’s price action around $80K. This level may prove difficult to break decisively and is viewed by many market participants as an attractive buying zone.
More than 22% of Bitcoin’s circulating supply is now underwater. Glassnode identifies a key support level at $83,400; a break below this could open the door to a drop toward the “true average market price” near $80,700. A deeper decline risks pushing long-term holders into losses, potentially accelerating selling pressure.
According to Wintermute Ventures, speculative excess in crypto is likely to fade this year, with digital assets evolving into the core financial and settlement layer of the internet. In this scenario, stablecoins are expected to emerge as the primary medium of exchange in the digital economy.
Santiment reports that Ethereum balances held on exchanges have fallen for a sixth straight month, driven by strong interest in staking. Since July last year, exchange-held ETH has declined by roughly one-third to about 8.15 million tokens.
TRM Labs estimates that illegal cryptocurrency transaction volumes hit a record $158 billion in 2025, up 145% year on year. During the same period, hackers stole $2.87 billion across nearly 150 separate attacks.
Meanwhile, the USD1 stablecoin issued by World Liberty Financial, a company linked to US President Donald Trump, reached a market capitalisation of $5 billion in under a year, making it the world’s fifth-largest stablecoin.
Bitcoin tumbled sharply on Friday, sliding to its lowest level in more than two months as forced liquidations swept through leveraged positions and investors assessed the potential implications of a change in U.S. Federal Reserve leadership.
The world’s largest cryptocurrency was last down 6.4% at $82,620.3 as of 02:15 ET (07:15 GMT). Prices touched an intraday low of $81,201.5, coming close to breaching the April lows had the selloff extended further.
Crypto Markets See $1.7 Billion in Liquidations
Data from CoinGlass showed that roughly $1.68 billion in leveraged positions were liquidated over the past 24 hours amid the selloff, with about 93% of those losses coming from long positions—traders positioned for higher prices.
Approximately 270,000 traders saw their positions forcibly closed, intensifying the decline across Bitcoin and the broader digital asset market.
Liquidations occur when exchanges automatically shut leveraged positions that fail to meet margin requirements as prices move against traders, a dynamic that often amplifies volatility and accelerates downside moves in risk-on markets.
Traders Watch Trump’s Pick for Fed Chair
Friday’s selloff coincided with rising market unease over U.S. monetary policy leadership. President Donald Trump said he would announce his choice to replace Federal Reserve Chair Jerome Powell on Friday morning, fueling speculation that former Fed Governor Kevin Warsh could be nominated for the role. Reports indicate the White House is preparing to put Warsh forward as the next Fed chair.
Warsh is widely viewed as favoring a tighter approach to the Fed’s balance sheet and overall policy stance, a shift that could drain liquidity that has supported risk assets, including cryptocurrencies.
Markets have responded with broader risk-off positioning, a firmer U.S. dollar, and rising yields, while crypto prices have come under renewed pressure. Central bank policy direction plays a crucial role in shaping interest rates, liquidity, and risk-asset valuations—key drivers for high-beta assets such as Bitcoin.
Altcoins Slide as Ether and XRP Fall 7%
Most altcoins also slumped on Friday as liquidation-driven selling rippled through the market.
Ethereum, the world’s second-largest cryptocurrency, fell more than 7% to $2,749.92, while XRP, the third-largest, also dropped 7% to $1.75.
Elsewhere, Solana slid 6.5%, Cardano plunged 8%, and Polygon retreated by more than 5%.
Among meme tokens, Dogecoin declined 6%, while $TRUMP fell 3.5%.
Bitcoin gave up part of its earlier gains on Wednesday after the Federal Reserve left interest rates unchanged, as widely anticipated, slipping back below the $90,000 level after briefly reclaiming it for the first time since last Friday.
The world’s largest cryptocurrency was last trading 1.3% higher at $89,564.1 as of 14:29 ET (19:29 GMT).
Bitcoin climbs back above $90,000 as dollar rebounds
Bitcoin’s advance this week was underpinned by broad weakness in the U.S. dollar, after President Donald Trump sought to ease concerns over the currency’s recent decline.
The Dollar Index snapped a four-day losing streak, while gold extended its sharp rally to fresh record highs above $5,300 per ounce, further strengthening demand for alternative stores of value.
After several sessions of rangebound trading, bitcoin set its sights once again on the key psychological $90,000 level and reached that mark on Wednesday.
“Bitcoin needs to decisively break back above $90,000 and then hold that level on any pullback to attract new buying interest,” said David Morrison, senior market analyst at Trade Nation. “If that happens, $100,000 would become the next bullish target. But it’s still early, and bitcoin needs to create more distance from key support levels.”
He added that, for now, a move below $85,000 remains a clear possibility. Meanwhile, the Federal Reserve concluded its two-day policy meeting on Wednesday by keeping interest rates unchanged, in line with expectations.
Investors are paying close attention to the Fed’s accompanying statement and comments from Chair Jerome Powell for clues on the timing of potential rate cuts, especially as inflation appears to be cooling while economic growth remains solid.
Lower interest rates generally favor non-yielding assets like bitcoin, as they reduce the opportunity cost of holding them.
Adding to the uncertainty, markets are also closely monitoring developments around President Trump’s expected nomination of a new Federal Reserve chair. Investors are evaluating how increased political influence could alter the central bank’s policy approach and its tolerance for inflation.
Tether increases gold exposure, targets up to 15% portfolio allocation
Tether plans to dedicate a significant share of its investment portfolio to physical gold, expanding on bullion reserves that already underpin some of its products, CEO Paolo Ardoino told Reuters.
The stablecoin issuer currently holds roughly 130 metric tons of physical gold, having added 27 tons in the fourth quarter alone. Ardoino said the company has recently been buying about two tons per week.
“For our own portfolio, it makes sense to allocate around 10% to bitcoin and about 10% to 15% to gold,” Ardoino said, while declining to disclose the total size of Tether’s investment portfolio or the precise portion currently held in bullion.
“It’s difficult to choose which one I prefer,” he added. “It’s almost like having two children and deciding which one is more beautiful.”
Tether will maintain direct ownership of the gold, which is stored in Switzerland, and has not set a fixed target for future purchases. Buying decisions will be reviewed on a quarterly basis. Ardoino noted that the company began accumulating gold in 2020 during the COVID-19 pandemic and has steadily increased exposure as geopolitical risks have risen.
“The world isn’t in a good place right now. Gold is hitting record highs day after day. Why? Because people are afraid,” he said.
Gold prices have surged over the past year, rising 64% in 2025 and continuing their rally into 2026, with gains of 22% so far this year. The metal hit a record high of $5,311 per troy ounce on Wednesday, supported by weakening confidence in the U.S. dollar and concerns about the independence of the Federal Reserve.
Crypto prices today: altcoins post modest gains
Most major altcoins also moved higher on Wednesday, following gains in bitcoin.
Ethereum, the world’s second-largest cryptocurrency, rose 1% to $3,008.75, while third-ranked XRP added 0.4% to trade at $1.91.
Bitcoin hovered near one-month lows on Monday, extending last week’s sharp losses as investors stayed cautious ahead of the Federal Reserve’s policy meeting and amid heavy liquidations in leveraged crypto markets.
The world’s largest cryptocurrency was last down 0.7% at $88,081 as of 09:36 ET (14:36 GMT).
Bitcoin has fallen more than 6% over the past week, pressured by a broader risk-off mood driven by uncertainty over global monetary policy, volatility in US Treasury yields, and sharp swings in foreign exchange markets.
Crypto markets remain under pressure as heavy liquidations and Federal Reserve caution weigh on sentiment.
Last week’s selloff was intensified by forced liquidations in derivatives markets, where highly leveraged positions were rapidly unwound. Market data shows more than $1 billion in leveraged crypto positions were liquidated, with long Bitcoin trades making up most of the losses, amplifying the downward price move.
Bitcoin had surged earlier this year on hopes of easier US monetary policy and steady inflows into spot ETFs, but sentiment has since turned cautious as investors reassess the interest-rate outlook and cut risk exposure amid volatility in currency and bond markets.
Focus now shifts to the Federal Reserve’s two-day policy meeting ending Wednesday. While rates are expected to remain unchanged, markets will watch Chair Jerome Powell’s comments closely for signals on the timing and extent of potential rate cuts later this year.
Investors are also watching signals on liquidity conditions and the Fed’s balance sheet, both key drivers for crypto markets.
Adding to the uncertainty, traders are awaiting US President Donald Trump’s expected announcement of his nominee for the next Federal Reserve chair, an appointment that could shape future monetary policy, especially if the new leadership is viewed as more dovish or closely aligned with the administration’s economic agenda.
Strategy increases its Bitcoin holdings with a $264 million purchase.
Strategy said it bought 2,932 more Bitcoins for about $264 million between Jan. 20 and Jan. 25, paying an average price of $90,061 per coin, according to a regulatory filing released Monday.
The purchase raises the company’s total Bitcoin holdings to 712,647 tokens, valued at roughly $62.5 billion.
Led by Michael Saylor, the firm has accumulated its Bitcoin position at an average cost of $76,037 per coin, bringing total investment to about $54.2 billion, including related expenses.
Crypto price today: Altcoins remain weak
Most altcoins stayed under pressure on Monday, extending losses amid cautious sentiment. Ethereum slipped 0.4% to $2,916.08, while XRP rose 1.5% to $1.91. Solana fell 1.8%, with Cardano and Polygon largely flat. Among meme tokens, Dogecoin edged up 0.3%, while $TRUMP declined 1%.
Wednesday brings the FOMC meeting and Chair Powell’s press conference, and it wouldn’t be surprising if President Trump chose that moment—ideally around 2:30 p.m. ET—to announce his pick for the next Fed chair. Such timing would dominate headlines, catch financial media off guard, and inject maximum uncertainty into markets.
That said, the Fed is not expected to cut rates at this meeting, which should keep the event relatively uneventful. In the bigger picture, what the Fed does between now and May may prove less important, particularly if a new chair is appointed and moves quickly toward easing.
Markets appear to be dialing back expectations for aggressive rate cuts. Current pricing suggests the fed funds rate settles near 3.25% by December, with little additional easing beyond that. To meaningfully shift those expectations, the nominee would likely need to be notably dovish—something markets already anticipate, given the widespread assumption that Trump will select a policy-leaning accommodator.
As a result, the risk of a breakout in the 2-year Treasury yield appears increasingly credible, with initial resistance near 3.62%. Beyond that, a move back toward the 4% level cannot be ruled out. From a technical perspective, the setup supports this view: the 2-year yield has formed multiple bottoms in recent months, and the RSI has begun to turn higher, signaling building upside momentum.
The direction of the 2-year yield may ultimately be more closely linked to oil prices. With inflation still hovering near 3% and crude having fallen to around $60 from highs in the $120s, the message is clear: a rebound in oil prices could quickly reignite inflation pressures. That dynamic likely explains why the price action in oil and the 2-year yield charts has begun to look strikingly similar.
The Bank of Japan once again chose to kick the can down the road, leaving rates unchanged and, in my view, offering little in the way of a clear policy roadmap. The yen’s strength on Friday appeared to be driven solely by reports of a possible “rate check” by the New York Fed on behalf of the U.S. Treasury—widely interpreted as a warning signal that currency intervention could be imminent. Perhaps the strategy is to keep markets stable until after the snap election in February. It’s hard to say, but it should be telling to see how markets react once Japan reopens on Monday.
The Korean won also strengthened notably against the U.S. dollar on Friday. In recent weeks, there has been growing chatter that the KRW had become excessively weak, so it’s likely the currency took the developments around the yen as a warning signal and moved to reprice accordingly.
The Korean won likely matters more than many investors realize, given the sizable exposure South Korean investors have built up in U.S. equities. That dynamic is probably one of the reasons the KRW has weakened so significantly in the first place—buying U.S. stocks requires selling won for dollars.
If the KRW begins to strengthen from here, it could start to put pressure on that trade. For investors who are unhedged on the currency side, a stronger won increases the risk of FX-related losses on their U.S. equity holdings, potentially prompting position adjustments.
Of course, this week also brings major earnings reports from Microsoft, Apple, Tesla, and Meta. From what I can see, all four stocks are currently sitting in positive gamma with positive delta positioning. Implied volatility typically builds into earnings because of the event risk, which sets up a familiar dynamic: unless a company delivers truly blowout results, the reaction can easily turn into a sell-the-news move. Once earnings are released, implied volatility collapses and hedges are unwound as delta decays, potentially putting pressure on the shares.
Bitcoin declined on Friday, rounding out a weak week as easing tensions between the U.S. and Greenland, along with a major purchase by Strategy, failed to revive demand for cryptocurrencies.
Risk appetite during the Asian session was further constrained by a Bank of Japan meeting and warnings from U.S. President Donald Trump about possible military action against Iran.
Safe-haven assets such as gold and other precious metals surged to record highs amid rising demand for physical stores of value, while Bitcoin largely underperformed compared with bullion. The world’s largest cryptocurrency slipped 0.5% to $89,517.3 by 00:53 ET (05:53 GMT).
Bitcoin on track for 5% weekly drop, ignores positive signals
Although Bitcoin posted modest gains earlier this week after Trump softened his stance on Greenland, the world’s largest cryptocurrency quickly reversed direction, drifting back toward one-month lows.
Bitcoin was on course for a roughly 5% weekly decline, finding little support from Strategy Inc. (NASDAQ:MSTR) despite the company’s disclosure of a $2.1 billion Bitcoin purchase.
In recent months, Strategy has also become a source of concern for the market, as investors questioned the long-term sustainability of its Bitcoin treasury strategy, particularly amid Bitcoin’s continued price underperformance.
Bitcoin and the broader crypto market were further pressured by delays to a long-anticipated crypto regulation bill, after leading U.S. exchange Coinbase Global Inc. (NASDAQ:COIN) opposed the legislation in its current form.
Retail demand for Bitcoin remained subdued, as strong performance in technology stocks—driven by enthusiasm around artificial intelligence—absorbed much of the available investment capital.
The Coinbase Bitcoin Premium Index, which tracks the difference between Bitcoin’s U.S. price on Coinbase and the global average, has shown Bitcoin trading at a near-persistent discount in the U.S. since mid-December, signaling continued weakness in retail interest within the world’s largest crypto market.
Crypto prices today: Altcoins slide, headed for sharp weekly losses
Broader cryptocurrency prices declined alongside Bitcoin and were on track for significantly steeper losses this week.
Ether, the world’s second-largest cryptocurrency, dropped 2.4% to $2,946.35 and was heading for an 11.2% weekly decline. XRP fell 1.5%, while BNB slipped 0.1%, with both tokens set to post weekly losses of around 6% to 8%.
Solana and Cardano each declined 1.5% and were down roughly 10% for the week. Among memecoins, Dogecoin fell 1.3%, while $TRUMP eased 0.9%.
This move would likely complete a broader irregular expanded flat formation, labeled red W-iv, made up of green waves W-a, W-b, and W-c. These waves collectively form a 3-3-5 structure (gray a, b, c – a, b, c – i, ii, iii, iv, v), unfolding near the 50% retracement level of the entire red W-iii. From this zone, red W-v could begin, with upside potential extending to at least $164K, thereby fulfilling the first condition outlined above.
In our previous update, we highlighted three key observations on Bitcoin (BTC), spanning both long-term and short-term perspectives.
Bitcoin posted a negative close in 2025, marking a disappointing year for the asset. Still, historical patterns—albeit based on limited data—show that BTC has never finished lower for two years in a row. With 2024 ending in positive territory, this suggests that the period from 2026, and potentially through 2028, could be bullish.
That said, similar to conditions seen in 2015 and as outlined in earlier analysis, the risk of a deeper pullback cannot be dismissed. Bitcoin may still print a lower low near the upper band of long-term support, around $69K–$73K, before a sustained upside move takes hold.
To confirm renewed bullish momentum, BTC must break above the December 9 high at $94,617, which would open the door to a potential third wave advance. As a result, bullish warning levels have been revised to $91,483, $90,327, $88,410, $86,704, and $84,424. Each successive break below these thresholds raises the probability by roughly 20% that BTC will revisit the low-to-mid $70K range before attempting another rally.
These observations matter because they provide the framework for both current market behavior and likely future developments. Bringing the analysis up to date, Bitcoin broke above the $94,617 level on January 13, but managed to stay above it for only four days before slipping back to around $88,000. This proved to be a false breakout, invalidating the impulsive path we had been monitoring. At the same time, the third warning level has now been breached, raising the probability to 60% that the broader uptrend has ended. As a result, we have promoted our alternative bearish Elliott Wave count to the primary scenario. See Figure 1 for details.
Figure 1. Bitcoin’s intermediate-term Elliott Wave count since June 2025.
The failed breakout strongly points to the January 14 peak at $97,943 as the termination of orange Wave-c within gray W-iv. Notably, Wave-c was nearly equal in length to the same-degree orange Wave-a that topped at $94,617, measuring 13,519 versus 14,055 points—a textbook relationship.
In classical Elliott Wave analysis, a third wave typically extends to the 138.2%–161.8% projection of the first wave, measured from the second wave. On November 21, Bitcoin’s low at $80,562 came close to the 1.618 extension of the gray W-i low from October 17, measured from the gray W-ii high on October 27 at $79,654. Following W-iii, waves W-iv and W-v are expected, with W-iv commonly retracing into the 76.4%–100% extension zone, and W-v subsequently targeting the 176.4%–200.0% extension zone.
The January 14 gray W-iv high occurred almost precisely at the 76.4% level—$97,943 versus a projected $99,068—keeping the structure technically sound. To date, Bitcoin’s price action appears to be unfolding as a downward impulse. In addition, W-ii formed a zigzag while W-iv developed as an expanded flat, satisfying the rule of alternation. Accordingly, provided BTC remains below the January 14 high at $97,943, we anticipate a move toward the 176.4%–200.0% Fibonacci extension area between $76,335 and $70,970 for gray W-v, fulfilling conditions 2) and 3) outlined earlier.
Completion of gray W-v would likely also conclude a broader irregular expanded flat, labeled red W-iv, composed of green waves W-a, W-b, and W-c. Together, these form a 3-3-5 structure (gray a, b, c – a, b, c – i, ii, iii, iv, v), unfolding near the 50% retracement of the entire red W-iii. From that base, red W-v could then begin, with upside potential extending to at least $164K, satisfying condition 1) from the list above.
Monero hovers near the key psychological $500 support after plunging 20% on Tuesday.
Hyperliquid is testing an important support level following a roughly 18% drop over three consecutive days.
Morpho edges toward the $1 mark as an 11% decline on Tuesday reinforces bearish pressure.
Monero (XMR), Hyperliquid (HYPE), and Morpho (MORPHO) are among the worst performers on Wednesday, as the broader cryptocurrency market records more than $1 billion in liquidations over the past 24 hours. From a technical standpoint, all three tokens are pressing key support levels following steep losses logged on Tuesday.
The downturn mirrors the sharp gap lower in US equities on Tuesday, driven by renewed tariff threats, looming court rulings, escalating geopolitical risks, and turbulence in Japan’s bond market.
Monero faces the risk of slipping below the $500 level
Monero is hovering near the $500 mark at the time of writing on Wednesday, with this psychological level limiting further downside after a sharp 20% sell-off the day before. Additional support may emerge at the 50-day Exponential Moving Average (EMA) around $484, followed by the 100-day EMA near $432, levels that would help maintain the broader bullish structure.
On the daily chart, the Moving Average Convergence Divergence (MACD) shows widening negative histograms, as the MACD line has crossed below the signal line and both indicators remain in negative territory, pointing to increasing bearish pressure.
Meanwhile, the Relative Strength Index (RSI) stands at 47.55, indicating a loss of bullish momentum.
XMR/USDT daily logarithmic chart.
On the upside, a sustained close above the 20-day EMA at $542 could extend the XMR rebound, targeting the $600 round figure.
Hyperliquid rebounds from a key support level
Hyperliquid is trading above $21 at the time of writing on Wednesday after suffering an 11% decline on Tuesday. The exchange token is up around 2% on the day, suggesting a short-term rebound following a roughly 18% drop over the past three sessions.
The Moving Average Convergence Divergence (MACD) continues to flash a sell signal triggered by Monday’s bearish crossover, with both signal lines pushing deeper into negative territory and red histograms widening. Meanwhile, the Relative Strength Index (RSI) sits at 35, hovering near oversold levels and underscoring persistent downside pressure.
Should HYPE register a daily close below the October 10 low at $20.82, price action could extend toward the S1 Pivot Point at $19.70, increasing the risk of further losses.
HYPE/USDT daily price chart.
However, a sustained rebound from the $20 level may face immediate resistance at the 20-day EMA near $24.52.
Morpho’s short-term recovery after a bearish slide
Morpho is edging about 2% higher at the time of writing on Wednesday, following a steep decline of roughly 20% over the past six days. The token continues to trade below its 20-, 50-, and 200-day Exponential Moving Averages (EMAs), all of which are trending lower, reinforcing the prevailing bearish bias.
Immediate support is located at the December 28 low near $1.08. A break below this level could accelerate losses beneath the psychological $1 threshold, with the S1 Pivot Point at $0.94 emerging as the next downside target.
In line with Hyperliquid, the Moving Average Convergence Divergence (MACD) indicator has turned bearish, with the MACD line drifting toward zero as the negative histogram expands, pointing to strong downside momentum.
Meanwhile, the Relative Strength Index (RSI) has fallen to 40, slipping decisively below the midline and signalling a sharp shift toward selling pressure, while still leaving room for further downside before oversold conditions are reached.
MORPHO/USDT daily price chart.
A prolonged rebound in MORPHO may encounter resistance at the 20-day EMA near $1.26, which could limit upside potential.
Pi Network rebounded about 1% on Tuesday from a key support level after falling roughly 4% on Monday.
Data from PiScan showed more than 4 million PI tokens were withdrawn over the past 24 hours, signaling retail efforts to hedge against further downside.
From a technical perspective, PI remains under heavy selling pressure, with momentum turning bearish and leaving the token vulnerable to additional losses.
Pi Network (PI) was up about 1% at press time on Tuesday, marking a modest rebound after hitting a new record low of $0.1502 on Monday. Over the past 24 hours, mainnet holders have withdrawn more than 4 million PI tokens from centralized exchanges that support Pi Network. Despite the slight recovery, the technical outlook for PI remains bearish, with momentum indicators pointing to sustained selling pressure.
Retail buying limits further downside
PiScan data shows that centralized exchange reserves fell by 4.24 million PI tokens over the past 24 hours, signaling substantial withdrawals. This points to strong buying interest, which helped cap losses and secure a daily close above $0.1900. A continued decline in exchange reserves could ease supply pressure and raise the chances of a rebound in PI.
Technical outlook: Is PI at risk of further downside?
Pi Network was holding above the $0.1900 level at the time of writing on Tuesday, roughly 30% above Monday’s low of $0.1502. The rebound coincided with sizable exchange withdrawals and helped prevent a breakdown below the $0.1919 support level.
However, the downward-sloping 20-day and 50-day Exponential Moving Averages (EMAs) continue to point to a prevailing downtrend.
Momentum indicators on the daily chart remain decisively bearish. The Moving Average Convergence Divergence (MACD) has turned lower from the zero line, crossing below the signal line with an expanding negative histogram. Meanwhile, the Relative Strength Index (RSI) sits near 30, hovering around oversold territory and reflecting the recent selloff.
A daily close below $0.1919 could deepen the bearish trend, exposing downside targets at the S1 and S2 Pivot Points of $0.1835 and $0.1632, respectively.
PI/USDT daily price chart.
Any rebound in PI is likely to encounter resistance at the falling 20-day and 50-day EMAs, currently at $0.2045 and $0.2116, respectively.
Economic growth depends on population expansion and the formation of new households. While the idea of fewer people—less congestion, smaller crowds, and reduced strain on infrastructure—may seem appealing, the risks associated with population decline are often understated. Much like deflation, a shrinking population poses serious and potentially greater threats to long-term economic stability.
Demographers use the “total fertility rate” (TFR), defined as the average number of births per woman, as a key measure of population sustainability. A TFR of at least 2.1 is required to maintain a stable population, with the additional 0.1 accounting largely for infant mortality. Although the global TFR stood at 2.24 last year, this figure masks significant regional disparities. Excluding Africa, the global fertility rate falls well below 2.0.
In 2025, most major advanced economies reported TFRs under the replacement threshold of 2.0, underscoring the growing demographic challenge facing industrialized nations.
No major developed economy currently records a total fertility rate above the 2.1 replacement threshold. Outside of Africa, global population growth is already in decline. Historically, from 1950 to 1970, the world’s wealthiest nations averaged more than 2.7 births per woman. Since 1995, however, that figure has fallen sharply to around 1.6, reaching a record low of approximately 1.5 during the 2020–2025 period.
Globally, population growth remains marginally positive, driven largely by demographic expansion in Africa and rising life expectancy among older populations. However, Asia’s two largest economies—China and Japan—are experiencing population decline, a trend that constrains their long-term growth potential. More critically, shrinking cohorts of younger workers are increasingly unable to shoulder the financial burden of supporting aging populations that are living longer and often facing higher healthcare needs.
China has formally abandoned its long-standing one-child policy, but behavioral patterns shaped by decades of enforcement have proven difficult to reverse. Today, many young couples are reluctant to have even a single child, prioritizing career advancement and higher incomes instead. Compounding the challenge, the legacy of the policy produced severe demographic distortions. Prior to 2010, widespread prenatal sex selection—driven by the desire to raise a single male “heir” to support parents in old age—led to a significant gender imbalance, with roughly 118 male births for every 100 female births between 2002 and 2008. The result is a surplus of men and a shrinking pool of potential spouses.
In the mid-1990s, a typical Chinese household consisted of four grandparents, two parents, and one heavily relied-upon child—the so-called “young emperor.” This inverted demographic pyramid is financially unsustainable, as the burden of supporting multiple generations increasingly falls on a single income earner.
Europe faces an even steeper demographic challenge. With an average fertility rate of just 1.4 children per woman and a comparatively generous system of old-age pensions, the region confronts mounting fiscal pressure. These constraints help explain Europe’s historical reliance on the United States for security spending—a strategy that may prove risky as President Donald Trump presses European nations to assume greater responsibility for their own defense.
The United States remains in a stronger demographic position than Europe or much of Asia, in part because of its relatively effective assimilation of immigrants and higher rates of family formation in more conservative regions of the country. However, with the administration introducing tighter immigration restrictions and stepping up efforts to detain and deport undocumented workers, questions are emerging over whether there will be a sufficient supply of willing young workers to staff the growing number of factories being brought back onshore.
Another structural risk embedded in these demographic trends is the growing strain on Social Security and Medicare. These programs function as intergenerational compacts, in which today’s workers finance the retirement and rising healthcare costs of the elderly. Unlike 401(k) plans or IRAs, they are not savings vehicles but largely unfunded entitlements built on historical assumptions of higher birth rates and a broad, growing workforce.
As younger generations are increasingly less likely to marry, have children, or pursue stable, high-earning careers—instead relying more on gig-based employment—the system faces mounting pressure. These shifts raise serious concerns about the long-term sustainability of funding future benefits, particularly in a society producing fewer contributors to support the next generation of retirees.
Data from CoinGlass indicate that more than $800 million in leveraged positions were liquidated across the cryptocurrency market over the past 24 hours.
Risk-off sentiment has intensified as European capitals weigh retaliatory tariffs of up to $101 billion against the United States, following tariff threats from President Donald Trump.
Long positions accounted for 90.5% of total liquidations, with the largest single event being a $25.83 million BTCUSD liquidation on Hyperliquid.
The cryptocurrency market saw a sharp pullback on Monday, with total liquidations exceeding $800 million over the past 24 hours. The downturn was driven largely by rising risk-off sentiment, as escalating trade tensions between the European Union and the United States unsettled traders.
Escalating trade tensions dampen demand for risk assets
Cryptocurrency markets started the week under pressure, with Bitcoin (BTC) slipping below the $93,000 mark on Monday, dragging major altcoins—including Ethereum (ETH), Solana (SOL), and Cardano (ADA)—lower in tandem. The sell-off came amid escalating trade tensions between the United States and the European Union.
U.S. President Donald Trump announced plans to impose tariffs on eight European countries that have opposed his proposal for the United States to acquire Greenland. The measures include a 10% levy on goods from Denmark, Sweden, France, Germany, the Netherlands, Finland, the United Kingdom, and Norway, set to take effect on February 1 and remain in place until Washington is permitted to purchase the territory.
In response, the Financial Times reported on Sunday that EU capitals are weighing retaliatory measures, including up to €93 billion ($101 billion) in tariffs on U.S. goods or potential restrictions on American firms’ access to the European market.
The escalating trade dispute has fueled a risk-off mood among investors, weighing heavily on high-risk assets such as cryptocurrencies. This shift in sentiment triggered widespread liquidations across the crypto market, with more than $800 million in leveraged positions wiped out over the past 24 hours, according to CoinGlass data.
Long positions accounted for 90.5% of total liquidations, highlighting the market’s prior bullish positioning. The largest single liquidation was a $25.83 million BTCUSDT position on Hyperliquid.
The Fear and Greed Index slipped to 44 on Monday from a high of 61 on Thursday, signaling a shift away from optimism toward a more cautious market mood.
Volatility across major CoinDesk indices stayed low, with bitcoin maintaining its position above the key $94,500 breakout level despite limited price movement. Dash (DASH) led the market, climbing 15% on the day and pushing its weekly gain to 141% as most other altcoins cooled. Meanwhile, altcoins showed relative strength against major cryptocurrencies, with the CoinDesk 80 Index ticking higher as traders waited for new catalysts from U.S. markets and global political developments.
Crypto market volatility slowed sharply on Friday, with all major CoinDesk indexes moving less than 1% since midnight UTC. The subdued action comes as Bitcoin continues to trade above the key $94,500 level, which it broke earlier this week after months of range-bound movement.
Zcash, APT, and Polygon (POL) each recorded slight losses, while Dash—a privacy-focused payments token—continued its strong start to the year, climbing 15% and extending its weekly gain to 141%. The market is now looking for its next catalyst as political unrest in Iran and Venezuela revives crypto’s “safe-haven” narrative, highlighted by the divergence between digital assets and U.S. equities, which underperformed BTC and ETH this week.
Derivatives market positioning
Exchanges have unwound nearly $240 million in leveraged crypto futures positions. Total futures open interest across the market has eased to $143 billion from $146 billion, signaling a cooling in demand for leveraged trading.
Bitcoin’s volatility slump persists. Volmex’s 30-day implied volatility now reflects an average daily move of about 2.5% over the next month. Ethereum’s 30-day implied volatility has also fallen, reaching its lowest level since early 2024.
ZEC saw futures open interest drop 14% in 24 hours, contributing to capital outflows across most major tokens, including bitcoin, ether, solana, and XRP. In contrast, Monero stood out with an 8% increase in open interest.
ZEC’s annualized funding rates plunged to -50%, indicating strong demand for bearish, short positions. This also suggests that downside bets may be becoming crowded, a setup that can often precede a potential short squeeze.
In the options market, block trades showed a large short position in bitcoin’s $112,000 call expiring on February 6. This may have been paired with a long spot position as part of a covered call strategy to generate additional yield. For Ethereum, block flows leaned toward the iron condor strategy, which is typically used to benefit from a range-bound price environment.
Crypto token overview
DASH once again took the lead on Friday, climbing over 15% since midnight UTC, even as most of the altcoin market stayed subdued following an earlier rally at the start of the week. This could be a constructive signal for the broader altcoin space, as DASH had also been the first mover during Asian trading on Tuesday, hours before the wider market broke higher.
XTZ also displayed strength, advancing 8.3% from a morning low of $0.57 to $0.62. The CoinDesk 80 Index (CD80), which tracks a broader range of altcoins, is up 0.68% since midnight, while the CoinDesk 20 (CD20) is largely flat—suggesting relative outperformance among altcoins as major tokens move sideways.
Traders are now watching the U.S. market open to see whether traditional markets might inject volatility ahead of the weekend, a period that is typically marked by lighter volume and liquidity.
Jerome Powell’s eight-year leadership at the Federal Reserve is ending amid significant challenges for the U.S. central bank and divided opinions among policymakers about the right approach to monetary policy. So, what might Powell’s last moves as Chair look like in this environment?
The labor market is still slightly weaker than full employment. Private sector job growth has stalled recently, and although the unemployment rate dropped a bit in December, it remains above what most economists consider the long-term natural rate.
On the inflation front, recent data are more promising. Core CPI inflation fell to 2.6% year-over-year in December from 3.1% in August. Some temporary shutdown effects may be lowering this figure by about 0.1 percentage points, and the Fed’s preferred inflation gauge, the PCE deflator, likely hasn’t improved as much. However, the overall trend for core inflation entering 2026 is clearly downward.
Given this, the Federal Open Market Committee (FOMC) likely has room to continue guiding the federal funds rate toward a neutral level in the near term. The forecast remains two quarter-point rate cuts in March and June, with the rate then holding steady at 3.00%-3.25%.
However, the opportunity for further rate reductions is narrowing. Fiscal stimulus from the recent One Big Beautiful Bill Act is expected to start boosting the economy by spring or summer. Additionally, tariff risks seem to be declining, which could also spur faster growth later in the year. The recent 75 basis points of rate cuts over the past three months will likely provide some support as well.
If labor market and inflation indicators show signs of overheating in the coming months, Powell and the FOMC might opt to pause policy adjustments and leave things steady for the next Chair. This successor could face skepticism from a committee under pressure from the Trump administration. The expectation of stronger economic growth in spring and summer further supports holding rates steady.
For now, the current forecast stands, but there is growing risk that rate cuts may be delayed or reduced compared to the baseline prediction.
Michael Saylor’s Strategy Inc. purchased nearly $1.25 billion worth of Bitcoin, marking its largest acquisition of the cryptocurrency since July.
Between January 5 and 11, the former MicroStrategy acquired 13,627 BTC, according to a regulatory filing on Monday. Most of these recent purchases were funded by proceeds from at-the-market sales of its Class A common stock.
This move follows the company’s disclosure last week of a $17.44 billion unrealized loss in Q4, due to the decline in Bitcoin’s value. New accounting rules require the firm to report the fair value of its Bitcoin holdings in earnings, causing significant fluctuations between profits and losses. Bitcoin dropped 24% in the last quarter of 2025—the largest decline since Q2 2022.
The substantial loss comes at a critical juncture for the dot-com-era software company turned Bitcoin proxy, which now holds a cryptocurrency portfolio valued at about $62 billion. Investor confidence has waned in the treasury-company model pioneered by Strategy’s co-founder and chairman, Saylor, over five years ago. Despite outperforming benchmark stock indexes initially, the company’s shares fell 48% in 2025.
The decline in Strategy’s share price has raised concerns that the company might need to sell Bitcoin to cover future expenses like growing dividends and interest payments, given that the cryptocurrency generates no income and the software division produces minimal positive cash flow. To alleviate these worries, Strategy created a cash reserve by selling common shares on December 1, which amounted to $2.25 billion as of January 4.
As of 10:10 a.m. in New York on Monday, Strategy’s shares remained relatively steady at around $158. Bitcoin also showed little movement, trading near $90,700.
On Wednesday, Bitcoin is trading above $95,000, having recently broken through a crucial resistance level. Ethereum continues its upward momentum, currently trading above $3,300 after gaining nearly 7% this week. Meanwhile, XRP has bounced back, holding support near its 50-day EMA at $2.17, indicating the potential for further gains.
On Wednesday, Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) continued trading higher, following gains of over 4%, 7%, and 5% respectively the previous day. BTC closed above a critical resistance level, while ETH and XRP held firm support at key price points. These top three cryptocurrencies by market cap appear poised to extend their rallies, with targets set at $100,000 for BTC, $3,500 for ETH, and $2.35 for XRP.
Bitcoin Breaks and Closes Above Key Resistance at $94,253
Bitcoin found support near the former upper consolidation zone around $90,000 on January 8 and showed a modest recovery through Monday. On Tuesday, BTC surged over 4%, closing above the 61.8% Fibonacci retracement level—measured from the April low of $74,508 to the October all-time high of $126,199—at $94,253. As of Wednesday, Bitcoin is trading near $95,300.
If Bitcoin maintains its upward momentum, it could push further toward the important psychological milestone of $100,000.
The daily chart’s Relative Strength Index (RSI) stands at 66, above the neutral midpoint of 50 and trending higher, signaling strengthening bullish momentum. Additionally, the Moving Average Convergence Divergence (MACD) indicator shows a sustained bullish crossover, with increasing green histogram bars above the neutral line, reinforcing the optimistic outlook.
BTC/USDT daily chart
Conversely, if Bitcoin undergoes a pullback, it may drop further toward the critical support level at $94,253.
Ethereum Bounces Back Following 50-Day EMA Test
Ethereum found support near its 50-day EMA at $3,139 last week and remained around that level through Monday. On Tuesday, ETH surged over 7%, closing above $3,325. As of Wednesday, it’s trading near $3,200.
If the upward momentum persists, Ethereum could push toward the December 10 high of $3,447. Similar to Bitcoin, Ethereum’s RSI and MACD indicators show bullish signals, reinforcing a positive outlook.
ETH/USDT daily chart
However, should Ethereum experience a pullback, it may drop further toward the 50-day EMA support at $3,139.
XRP bulls aiming for the $2.35 mark
XRP found support near its 50-day EMA at $2.07 last week and remained around that level through Monday. On Tuesday, XRP climbed over 5%. As of Wednesday, it is trading close to $2.16.
If the rally continues, XRP could push higher toward the daily resistance at $2.35. Similar to Bitcoin and Ethereum, XRP’s momentum indicators, including RSI and MACD, display bullish signals, reinforcing a positive outlook.
XRP/USDT daily chart
On the other hand, if XRP faces a pullback, it could extend the decline toward the 50-day EMA at $2.07.
Story continues its recovery, approaching the $3 mark after gaining 27% on Monday.
MYX Finance is nearing $6, marking its third straight day of gains within a short-term trading range.
Dash rose 3% on Tuesday, building on Monday’s nearly 6% increase, and is now testing the 200-day Exponential Moving Average (EMA).
Story (IP) is spearheading the market rally with double-digit gains in the past 24 hours, while MYX Finance (MYX) and Dash (DASH) each climb about 6%. These top performers are approaching critical resistance levels as they seek to continue their upward momentum.
Story Continues Rapid Recovery
Story edged up more than 1% Tuesday, building on Monday’s impressive 27% gain. The meme coin is on its third consecutive day of recovery and is nearing the $3.00 mark, approaching the November 6 low of $3.26, which previously acted as resistance on November 26.
If Story (IP) breaks above $3.26, it may set its sights on the 200-day Exponential Moving Average (EMA) at $4.101.
Momentum indicators on the daily chart suggest strong bullish momentum. The Relative Strength Index (RSI) stands at 79, indicating overbought conditions, while the Moving Average Convergence Divergence (MACD) continues to rise, supported by green histogram bars.
IP/USDT daily price chart.
If Story cannot break above $3.00, it may face a pullback that tests support at the 50-day Exponential Moving Average (EMA) around $2.356.
MYX Finance could struggle to surpass $6
MYX Finance is approaching resistance near $6.07, marking the upper boundary of a short-term range and aligning with the January 3 closing price. At the time of writing, MYX has gained nearly 1%, adding to the previous day’s 4% increase.
A strong close above $6.07 could propel MYX toward the January 3 high of $7.29, where it faces resistance from a trendline connecting the October 29 and November 15 highs.
From a technical standpoint, MYX Finance is showing renewed bullish momentum, with the Relative Strength Index (RSI) at 71 on the daily chart, edging into overbought territory. The MACD and its signal line also continue their upward trajectory. However, the absence of a clear trend in these indicators signals a possible risk of reversal.
MYX/USDT daily logarithmic chart.
Conversely, if MYX fails to hold above $6.07, a pullback could drive the price down toward the January 6 low of $4.58.
Dash’s Recovery Reaches 200-day EMA
Dash gained 3% as of Tuesday, building on a 6% increase from the previous day. The privacy-focused cryptocurrency is recovering from a December 23 low of $36.68 and is now nearing the 200-day Exponential Moving Average (EMA) at $41.30.
If Dash surpasses this level, it could next aim for the 50-day EMA at $45.04.
Technical indicators on the daily chart point to a revival in buying interest. The Relative Strength Index (RSI) at 46 is approaching the midpoint, signaling a rebound from last week’s decline, while the MACD has crossed above its signal line, reflecting renewed bullish momentum.
DASH/USDT daily price chart.
On the downside, if DASH fails to break above $41.30, it may pull back to retest the $36.68 support level.
Bitwise’s Chief Investment Officer, Matt Hougan, criticized the notion that Bitcoin is unsuitable for investment and 401(k) plans due to its volatility, pointing out that certain stocks can experience even greater price fluctuations.
Hougan’s remarks came on the same day that U.S. Senator Elizabeth Warren urged the Securities and Exchange Commission (SEC) to clarify how it plans to manage the risks associated with including cryptocurrencies in retirement funds.
In August of last year, U.S. President Donald Trump signed an executive order directing the Labor Department to reconsider restrictions on alternative assets in defined-contribution plans, potentially allowing cryptocurrencies to be included in 401(k) retirement accounts.
In a Monday interview with Investopedia Express Live, Matt Hougan criticized previous efforts by management firms like Vanguard and regulatory advice discouraging Bitcoin’s inclusion in 401(k)s as “ridiculous.”
“This is simply another asset class. Yes, it experiences price fluctuations and carries risk. However, over the past year, Bitcoin has been less volatile than Nvidia stock, yet there are no restrictions preventing 401(k) providers from offering Nvidia stock,” Hougan stated.
In 2025, Nvidia’s stock experienced a dramatic 120% price swing, dropping to around $94.31 in April before surging past $207 by October. During the same period, Bitcoin fluctuated between $76,000 and $126,080, a 65% swing. The inclusion of crypto assets in 401(k) retirement plans remains a key goal for crypto companies seeking wider retail adoption and increased legitimacy within the financial system.
Warren demands SEC answers on crypto in 401(k)
Meanwhile, U.S. Senator Elizabeth Warren is pressing the SEC for clarity on how it plans to manage risks associated with 401(k) plans investing in “alternative investments” like cryptocurrencies.
In an open letter released Monday, Warren expressed concerns that including crypto in retirement accounts may not benefit participants due to higher fees and expenses typically associated with these assets, alongside crypto’s inherent volatility.
“For most Americans, their 401(k) is a crucial source of retirement security, not a venue for risky financial speculation. Introducing crypto into these accounts could expose workers and families to significant losses,” she warned.
Warren has called on SEC Chair Paul Atkins to confirm by January 27 whether the regulator considers volatility when valuing crypto holdings of publicly traded companies.
She also seeks information on whether the SEC has evaluated manipulative practices in crypto markets and if it plans to publish research and educational materials to improve investor awareness.
Cryptocurrency Inclusion in 401(k) Plans Will Become Standard Over Time
Beyond President Trump’s executive order, in May the Department of Labor’s Employee Benefits Security Administration took a neutral position on cryptocurrency in 401(k) plans. They neither endorsed nor opposed it, having withdrawn a 2022 compliance guidance that previously discouraged crypto investments in retirement accounts.
Hougan noted that while it’s uncertain whether 401(k) providers will begin investing in crypto during 2026, he expects it to happen eventually and become normalized.
“These institutions move slowly, but the trend is clear. Over time, crypto will be treated like any other asset — which is exactly how it should be,” he added.
On Tuesday, Cardano’s price approached a crucial support level at $0.38 after failing to break above the 50-day EMA at $0.41 last week.
Metrics from on-chain data and derivatives present a mixed picture: selective accumulation by whales and an increase in long positions contrast with negative funding rates and falling social dominance.
From a technical perspective, a rebound is possible if the $0.38 support holds, but a confirmed drop below this level could indicate a more significant correction.
On Tuesday, Cardano (ADA) price approached an important support level at $0.38, following rejection from the 50-day Exponential Moving Average (EMA) last week. Market indicators present a mixed picture: selective whale accumulation and increasing long positions point to underlying demand, while negative funding rates and decreasing social dominance reflect cautious market sentiment. Technically, ADA stands at a critical juncture—holding above support may lead to a price rebound, whereas falling below could trigger a more significant downturn.
Investor sentiment remains mixed
Data from Santiment’s Supply Distribution indicates a bullish sentiment for Cardano, with some whales accumulating ADA during recent price declines.
The data reveals that whales holding between 10 million and 100 million ADA tokens (represented by the blue line) have collectively acquired 180 million ADA from January 8 through Tuesday. Meanwhile, another group of whales holding between 1 million and 10 million ADA tokens (yellow line) and those with 100,000 to 1 million tokens (red line) have offloaded a total of 50 million tokens during the same period.
This suggests that the second group of whales may have experienced a capitulation event, while the first group capitalized on the opportunity to accumulate Cardano at discounted prices.
Cardano supply distribution chart. Source: Santiment
Coinglass reported that ADA’s long-to-short ratio reached 1.33 on Tuesday, marking its highest point in more than a month. A ratio above one indicates that a majority of traders are anticipating a price increase for Cardano.
Cardano’s long-to-short ratio chart. Source: Coinglass
Cardano’s social dominance measures the proportion of ADA-related conversations within the cryptocurrency media, currently signaling a bearish outlook. According to Santiment, ADA’s share of crypto media discussions stands at 0.037%, the lowest since early December, and has been steadily decreasing since early January. This downward trend reflects diminishing investor interest and lower speculative activity, which often correlates with weaker demand and reduced short-term price momentum.
Cardano Social Dominance chart. Data source: Santiment
Additionally, Cardano’s funding rates dropped into negative territory on Tuesday, as shown in the Coinglass chart below. Negative funding rates mean that short positions are paying long holders, signaling bearish sentiment toward ADA.
Cardano’s funding rate chart. Source: Coinglass
Cardano price outlook: ADA approaches critical $0.38 support level
On January 6, Cardano’s price was rejected at the 50-day EMA near $0.41 and subsequently dropped by almost 9% through Monday, retesting the daily support level at $0.38. As of Tuesday, ADA remains close to this key support.
A daily close below $0.38 could signal a further decline toward the December 31 low of $0.32.
The Relative Strength Index (RSI) on the daily chart is stabilizing around the neutral 50 level, reflecting trader indecision. Additionally, the Moving Average Convergence Divergence (MACD) lines are converging, which also points to a lack of clear direction.
ADA/USDT daily chart
If the $0.38 daily support level holds firm, ADA may rebound toward the 50-day EMA at $0.41.
If economists were meteorologists, this week’s forecast would predict a data blizzard. However, clarity is expected to improve as markets receive highly anticipated reports on inflation, retail sales, and industrial production ahead of the Federal Reserve’s policy meeting on January 28.
Few economists expect Fed Chair Jerome Powell and the Federal Open Market Committee (FOMC) to ease monetary policy again later this month—and neither do we. This week’s data could either confirm or challenge that view, starting with the December consumer price index report on Tuesday.
The Fed drama intensified last week after President Donald Trump instructed Fannie Mae and Freddie Mac to purchase $200 billion in mortgage bonds—an action typically undertaken by the Fed itself. Many saw this move as an attempt to restart quantitative easing. Meanwhile, Fed Governor Stephen Miran told Bloomberg he anticipates 150 basis points of rate cuts this year.
What’s still missing, however, is significantly lower inflation and a recession that would justify such aggressive easing. This week will also feature speeches from several Fed officials, which could provide insight into the central bank’s thinking. The lineup starts with New York Fed President John Williams on Monday, followed by Governors Miran (Wednesday), Michael Barr (Thursday), Michelle Bowman (Friday), and Vice Chair Philip Jefferson (Friday).
Here’s a rundown of this week’s key data releases likely to influence the timing and scale of any future Fed rate cuts:
Inflation
Since the 43-day government shutdown in October and November, investors have struggled to gauge inflation accurately. The 2.7% year-over-year CPI rise in November, a slight dip from October’s 3.0%, was met with caution, as the shutdown likely disrupted the Bureau of Labor Statistics’ data gathering.
This increases the importance of the upcoming CPI and PPI reports, which will be key indicators before the FOMC’s January 28 interest rate decision.
The upcoming CPI report on Tuesday is expected to show a modest easing in inflation, with the Cleveland Fed’s model forecasting a 0.2% monthly increase and 2.6% year-over-year growth. The November PPI report, due Wednesday, is considered less impactful, while import and export price data for November will be released on Thursday.
Retail sales
Retail sales (Wednesday) are expected to show a slight increase in November after remaining flat in October (see chart). Overall, we believe consumer spending remains resilient despite rising living costs and soft employment figures. Additional important demand indicators this week include December existing home sales (Wednesday) and mortgage applications for the week ending January 9 (Wednesday).
Jobless claims
We anticipate layoffs will stay minimal, which has been the key insight from recent initial unemployment claims data (Thursday) (see chart). While demand for labor may be slowing in certain sectors, the feared AI-driven collapse in the job market has not materialized yet.
Composite economic indicators & business surveys
The composite cyclical indicators for December, due Thursday, are expected to show the coincident index holding at a record high, while the (mis)leading index continues its decline. Additionally, given delays in official hard data, the National Federation of Independent Business’ Small Business Optimism Index for December (Tuesday) should provide valuable insights, following its rise to 99 in November. Later in the week, the Federal Reserve banks of New York and Philadelphia will release their January business surveys (Thursday).
Our preferred coincident indicator is the S&P 500 forward earnings per share, which has accelerated in recent weeks and hit record highs (see chart).
Bitcoin’s price trend moved differently as Nasdaq futures dropped by nearly 0.8%.
Bitcoin increased by 1% amid growing tensions between President Trump and Fed Chairman Powell, which rattled markets and led to declines in U.S. stock futures and the dollar. Powell described the legal challenge as politically driven, intended to pressure the central bank into aggressive interest rate cuts. However, prediction markets do not anticipate this conflict resulting in Powell leaving his position prematurely.
Bitcoin climbed 1% Monday afternoon Hong Kong time as escalating tensions between President Donald Trump and Federal Reserve Chairman Jerome Powell unsettled investors, pushing both U.S. stock futures and the dollar index down.
Bitcoin reached $92,000 but remained within last week’s range of $89,000 to $95,000, according to CoinDesk data. Meanwhile, Nasdaq futures declined 0.8%, S&P 500 futures dropped 0.5%, and the dollar index eased to 99.00 from Friday’s high of 99.26.
Typically, BTC tends to follow the Nasdaq’s movements, but this time it diverged, suggesting growing safe haven demand for the cryptocurrency as investors seek a “hideout” amid the intensifying Trump-Powell conflict. Supporters of BTC have long praised it as an anti-establishment asset and a safeguard against reckless fiscal and monetary policies. Meanwhile, gold, a classic safe haven, also climbed to a record high of $4,600 per ounce.
Tensions between the Federal Reserve and the White House intensified over the weekend after Powell revealed that the Trump administration had threatened him with a criminal indictment related to the renovation of the Fed’s headquarters.
Powell dismissed the indictment as politically motivated, aimed at pressuring the Fed into cutting interest rates.
Trump has long been critical of Federal Reserve policies, especially its hesitance to aggressively lower rates to stimulate economic growth. Since taking office in 2025, he has frequently pushed Fed Chair Jerome Powell to reduce rates more sharply, labeling him a “numbskull” and threatening to make changes to increase White House influence over monetary policy.
Trump has consistently called for interest rates to fall to 1% or below. Although the Fed cut rates by 25 basis points last month to 3.5%, it is expected to hold steady at least until March and is unlikely to return to ultra-low levels anytime soon.
Despite the escalating attacks from Trump’s team, prediction markets do not anticipate an early departure for Powell, whose term ends in May this year.
However, persistent assaults on central banks, especially amid ongoing inflation, can undermine investor confidence and destabilize the domestic currency.
The sharp decline of Turkey’s lira in recent years, triggered by President Recep Tayyip Erdogan’s interference with central bank independence, stands as a cautionary example. Still, the dollar’s position as the global reserve currency makes a severe collapse in the U.S. less likely.
Reflecting on the start of this century, the first striking observation is our national shortsightedness. After surviving Y2K and the dot-com crash in 2000, our leaders assumed the path ahead would be smooth sailing from year one onward.
However, reality proved otherwise, beginning with a series of black swan events, notably the attacks on the World Trade Center and Pentagon on September 11. While such events are inherently unpredictable, it’s remarkable that the Congressional Budget Office (CBO) economists confidently forecasted in 2001 a future of continuous budget surpluses, anticipating the complete elimination of national debt by 2011.
For reasons unknown, the CBO issues 10-year federal spending and revenue projections, despite having no solid factual or practical foundation to accurately forecast beyond a year or two—akin to trying to predict the weather a year in advance.
The January 2001 CBO report highlights this myopia. Their projections simply extended current trends indefinitely without grounding in reality. Under this unrealistic mandate, the CBO projected a cumulative surplus of $5.6 trillion for 2002–2011.
In reality, deficits over that decade totaled $6.1 trillion—a swing of $11.7 trillion. It would have been much simpler to just flip a plus sign to a minus. The projections failed to account for the soaring costs of Bush’s “War on Terror” post-9/11, which led to prolonged wars in Afghanistan and Iraq, the bursting of the real estate bubble, and massive TARP bailouts to rescue large banks.
In short, this is a summary of CBO’s flawed foresight:
The first takeaway from this bleak forecast is that the CBO economists assumed deficits would increase in a smooth, predictable fashion—almost as if they were drawing a straight line with minor fluctuations, rather than reflecting the unpredictable realities of economic growth.
A second point is that the 2003 Bush tax cuts were not the main driver of the deficits. In fact, annual deficits dropped significantly—from $413 billion in fiscal year 2004 (which began October 1, 2003) to just $161 billion in fiscal year 2007. This means the deficit shrank by more than half during the four years following the tax cuts and before the 2007 real estate crash.
While much of this now feels like distant history, the ongoing wars and the Federal Reserve’s drastic response to the 2008 financial crisis—keeping interest rates near zero for eight years, essentially through the entire Obama administration—contributed to massive deficits that have persisted through to today, especially in the five years following the COVID-19 pandemic.
Since 2001, U.S. federal deficits have averaged about $1 billion annually, but that figure has surged to over $2 trillion per year since 2020, according to the U.S. Treasury.
Today, the total federal deficit stands at $38 trillion, which amounts to roughly $110,000 owed per American—far from the anticipated surpluses once projected.
Following a Challenging 2000–2009, Markets Surged in the First Quarter
What about the markets? After nearly a “lost decade” lasting nine years from March 2000 to March 2009, all major market indexes have experienced remarkable growth—particularly gold relative to the U.S. dollar.
By March 9, 2009, three of the four major indexes—the S&P 500, NASDAQ, and Russell 2000—had fallen by 50% since the decade began (while the Dow was down 40%), but they bounced back strongly from 2009 through 2025:
Over the same 25-year period, the Consumer Price Index (CPI) increased by 83%, which means the real market gains were somewhat diminished.
The U.S. dollar performed even worse, losing about 10% in value overall (and 8% against the euro), while gold and silver surged more than 15 times in value:
The first-quarter returns were decent, but the strong performance of gold and silver signals that the dollar—and the CBO’s deficit forecasts—cannot be relied on in the long run. In fact, President Trump has set a goal for 2026 to deliberately weaken the dollar against the Chinese yuan to “help” exporters boost overseas sales. Much of the talk about the dominance of the “King Dollar” is just rhetoric. In reality, many politicians aim to devalue their currencies to encourage trade, turning paper money into a “race to the bottom,” while gold quietly holds its value, watching from the sidelines.
This brings us to the 2025 summary—a major victory for precious metals as the dollar dropped by 10%.
2025 Brought Massive Gains for Precious Metals
The year 2025 exemplified the key trends seen over the past 25 years—while the stock market continued to climb, gold and silver surged even faster. Although inflation is easing, gold today serves less as an inflation hedge and more as a safeguard against crises, a hedge against the dollar, and increasingly, a hedge against cryptocurrency volatility.
In 2025, the U.S. Dollar Index (DXY) dropped by 10%, allowing major global currencies to gain between 5% and 15%. Meanwhile, the poorest-performing investments of 2025 brought good news for consumers through lower food and energy prices:
So, if 2026 mirrors the gains of 2025, it will surely be a rewarding year for most investors.
Pump.fun slid 11% on Wednesday from its 50-day EMA and now risks breaking below the 20-day EMA
Story has fallen more than 6% in the past 24 hours and is closing in on the $2 psychological floor
Pudgy Penguins is retesting the 50-day EMA as buying strength weakens following Wednesday’s 9% pullback
Pump.fun (PUMP), Story (IP), and Pudgy Penguins (PENGU) have come under strong selling pressure in the past 24 hours. PUMP and IP were unable to break above their 50-day Exponential Moving Average (EMA), triggering Wednesday’s retreat, while PENGU currently sits on its 50-day EMA. Overall, technical indicators continue to point to a bearish setup given the ongoing downward trend.
Weakening Bullish Momentum Puts Pump.fun at Risk of Further Downside
Pump.fun trades above the 20-day EMA at $0.002248 at press time on Thursday, following an 11% drop from the 50-day EMA at $0.002624 on the previous day, breaking the eight-day streak of uptrend.
If the meme-coin launchpad token slips below $0.0002248, losses could deepen toward the $0.002000 psychological level, with further downside targeting the S1 Pivot at $0.001262.
Daily-chart indicators show fading buyer strength: the RSI has eased to 51 and is drifting toward the midpoint, while the MACD has flattened, with shrinking green histograms pointing to weakening bullish momentum.
PUMP/USDT daily price chart.
If PUMP rallies back above the 50-day EMA at $0.002624, the next upside target would be the R1 Pivot Point at $0.002983.
Story hits the crucial crossroads at $2.00
Story trades around $2.00 at the time of writing on Thursday, marking its third consecutive bearish day. The meme coin is down 2%, extending the 4% decline from the previous day and risking the 20-day EMA at $1.91.
If IP falls below $1.91, it could further decline to the S1 Pivot Point at $1.22.
Similar to PUMP, the technical indicators on the daily chart point to declining buying pressure in Story. The RSI is at 53, slipping closer to the halfway line while the MACD approaches the signal line risking a crossover which would indicate renewed bearish momentum.
PENGU/USDT daily price chart.
To reinstate an upward trend, IP should exceed the 50-day EMA at $2.33, potentially targeting the R1 Pivot Point at $2.41.
Pudgy Penguins Faces a Potential Breakdown Below the 50-Day EMA
Pudgy Penguins is currently trading above the 50-day EMA at $0.01179 after Wednesday’s 9% pullback. At press time, PENGU is hovering near $0.01200, just below the R1 Pivot Point at $0.01193.
A drop beneath this zone could push the token toward immediate support at the 20-day EMA of $0.01091, near the key $0.01000 psychological level.
Like PUMP and IP, PENGU’s daily chart signals weakening demand, with technical indicators pointing to fading buying strength.
PENGU/USDT daily price chart.
On the upside, a recovery in PENGU could push the price toward the R1 Pivot Point at $0.01518.
The ISM service index suggests potential positive revisions for fourth-quarter GDP growth. On Wednesday, the Institute for Supply Management (ISM) reported that its non-manufacturing service sector index increased to 54.4 in December from 52.6 in November, marking the third consecutive month of expansion and the fastest pace of growth in over a year.
The new orders sub-index rose sharply to 57.9 from 52.9, while business activity climbed to 56 from 54.5. Additionally, new export orders improved to 54.2, up from 48.7 in November. Out of 16 surveyed service industries, 11 showed expansion in December.
Conversely, the ISM manufacturing index fell to 47.9 in December from 48.2 the prior month, continuing its contractionary trend for the tenth straight month (a reading below 50 indicates contraction). Only 2 of 17 manufacturing industries—Electrical Equipment, Appliances & Components, and Computer & Electronic Products—reported growth, likely supported by strong data center demand.
ADP’s December report showed private payrolls increasing by 41,000, missing economists’ expectation of 48,000. This follows a loss of 29,000 private jobs in November, meaning just 12,000 private jobs were created over the last two months. Manufacturing shed 5,000 jobs in December, while education and health services added 39,000, and leisure and hospitality gained 24,000 jobs. Regionally, the West lost 61,000 private sector jobs, while the South led with a gain of 54,000.
Residential investment acted as a 5.1% drag on GDP growth during the second and third quarters. Strengthening GDP going forward will depend largely on stabilizing the residential real estate market, which remains sluggish due to high mortgage rates, rising insurance costs, and an oversupply in several key areas. According to the Intercontinental Exchange, prices for U.S. condominiums dropped 1.9% in September and October, with high homeowners association (HOA) fees and insurance expenses cited as major factors. In nine major metropolitan regions, over 25% of condominiums have fallen below their original sale prices. While multiple Federal Reserve rate cuts could help support home prices, the current weakness is fueling deflationary concerns that the Fed needs to address.
If deflation emerges from (1) weak housing and rental prices, (2) low crude oil prices, and (3) deflation imported from China and other struggling global economies, the Fed may need to implement rapid interest rate cuts totaling around 100 basis points. With President Trump expected to nominate a new Fed Chair soon, current Chair Jerome Powell is likely to become a lame duck. Minutes from the December Federal Open Market Committee (FOMC) meeting indicated at least one more 0.25% rate cut is probable, but any further deflationary signals could prompt the Fed to enact much larger reductions in key rates in the coming months.
President Trump is expected to nominate a new Federal Reserve Chair in January who will likely reverse the Fed’s current restrictive policies and adopt a more pro-business stance. Should Kevin Hassett, the current Chair of the Council of Economic Advisors, be appointed, the Fed would gain a strong economic advocate, a development that many find promising and exciting.
Ethereum demonstrates strength with solid weekly and monthly gains, even as futures positions cool down.
Gold is projected to hit new highs in 2026, driven by declining interest rates, central bank purchases, and geopolitical uncertainties.
Good morning, Asia! Here’s what’s moving the markets today:
Crypto markets kick off the year in a phase of adjustment rather than decline, with Bitcoin holding steady above $90,000 and Ether showing renewed strength as institutions reset their positions.
As Hong Kong opened its Wednesday trading session, Bitcoin dipped slightly in the short term but stayed within a range after surpassing the key $90,000 mark.
“With stocks, gold, and other precious metals at record highs, we view the situation as a tug-of-war between prices correcting upward to align with these assets and potentially declining over the coming months to follow the 4-year cycle,” said George Mandres, crypto analyst at trading firm XBTO, in a note to CoinDesk. He added that the latter scenario “can quickly become a self-fulfilling prophecy.”
So far, neither upward nor downward pressure has taken control of Bitcoin’s price. Rather than a steep correction, Bitcoin has traded sideways, indicating a phase of digestion rather than distribution. Mandres highlighted the calendar effect as a key factor distinguishing the current situation from late 2025.
“What’s changed now compared to a few weeks ago, aside from Bitcoin surpassing $90K, is that a new year has begun, resetting P&Ls to zero, and investors are looking to allocate capital to attractive risk/reward opportunities,” he explained.
Ethereum presents a slightly different picture. Although ETH has outperformed Bitcoin over weekly and monthly periods, futures data show that positioning has cooled.
Bradley Park, founder of DNTV Research, noted that CME Ethereum futures open interest provides valuable insight beyond spot price movements.
“Increasing open interest has largely reflected institutional activity through DAT-style ETF arbitrage trades, while declining open interest signals unwinding positions,” Park said in a note to CoinDesk.
That unwinding now seems well underway.
“The recent pullback looks less like a structural shift and more like a loss of momentum, with positioning resetting to roughly July 2025 levels,” Park added.
Crucially, this reset has not triggered a sharp spot market sell-off.
A recent Glassnode report echoes this theme across assets. Options markets have de-risked significantly, with contracting open interest and rising volatility expectations. Meanwhile, U.S. spot ETF flows have returned to net inflows, indicating renewed institutional demand but also greater sensitivity to near-term profit-taking.
Overall, these signals suggest consolidation and rotation rather than a widespread risk-off selloff. Bitcoin is balancing conflicting macro factors without losing its trend, while Ethereum appears less crowded and better positioned to benefit if institutional flows pick up again.
Market Movement
BTC: Bitcoin is consolidating above $90,000, trading sideways after a recent rise. The price action reflects balance between macro support and caution from the market cycle, rather than fresh selling pressure.
ETH: Ether is hovering around $3,247, showing slight declines on short-term charts but maintaining strong gains over weekly and monthly periods, demonstrating resilience despite a recent pullback in futures positioning.
Gold: Following a nearly 65% rally in 2025, gold is expected to reach new highs in 2026, driven by falling interest rates, ongoing central bank purchases, and geopolitical uncertainties.
Nikkei 225: Japan’s Nikkei 225 dropped 0.45% on Wednesday as Asia-Pacific markets showed mixed results. Meanwhile, Australia’s ASX 200 gained 0.38% after inflation data came in below expectations.
Market Trend Structure (often called Market Structure) describes how price moves over time by forming highs and lows. It helps traders understand trend direction, strength, and possible reversals.
Types of Market Trend Structure
Why Market Trend Structure Is Important
✔ Identifies trend direction ✔ Helps with entry & exit timing ✔ Improves risk management ✔ Works across all markets:
Stocks
Forex
Crypto
Commodities
✔ Valid on all timeframes
Some other market trend patterns
Understanding market trend patterns requires a strong foundation in fundamental knowledge to be truly effective.
Dogecoin rose another 2% following a 4% rebound on Sunday, marking its fifth consecutive day of gains.
Shiba Inu paused after surging nearly 12% on Sunday, having broken out of a falling channel formation.
Pepe is approaching its 200-day EMA, with bulls eyeing a breakout after a 77% rally over the past four days.
Meme coins including Dogecoin (DOGE), Shiba Inu (SHIB), and Pepe (PEPE) are leading the broader crypto market rally, fueled by the U.S. cross-border operation to detain Venezuelan President Nicolás Maduro. Dogecoin has extended its advance for a fifth straight session, while SHIB and PEPE are taking a brief pause. Despite this consolidation, the technical outlook for the major meme coins remains bullish.
Venezuela is reportedly shifting from the petrodollar to cryptocurrencies like Tether’s USDT stablecoin to settle crude oil sales, with an estimated value between $10 billion and $15 billion. It’s believed that Maduro converted USDT into Bitcoin (BTC) to prevent his wallet from being frozen.
Along with a $2 billion gold-for-Bitcoin swap conducted between 2018 and 2020 and the seizure of BTC mining assets, Venezuela’s shadow reserve is estimated to hold around 600,000 BTC.
If the US Strategic Bitcoin Reserve seizes or absorbs Venezuela’s BTC holdings, it would effectively reduce Bitcoin’s available supply, potentially triggering a surge in demand. The current market recovery appears to reflect anticipation of this possible supply constraint.
Dogecoin Gains Bullish Momentum Above $0.15
Dogecoin rose 2% on Monday, building on Sunday’s 4% gain. The dog-themed meme coin has surpassed its 50-day Exponential Moving Average (EMA) at $0.14339 and is trading above the key $0.15 level.
This recovery follows a breakout rally from a descending wedge pattern on the daily logarithmic chart. The next target for Dogecoin is the 200-day EMA at $0.18202, which aligns with a resistance zone between $0.18100 and $0.18500.
Momentum indicators show strong buying pressure: the Relative Strength Index (RSI) stands at 65, leaving room before overbought territory, while the Moving Average Convergence Divergence (MACD) continues to climb with green histogram bars, signaling growing bullish momentum.
If DOGE slips below the key support near $0.14399, it could negate the recent breakout and expose the meme coin to further downside pressure, potentially testing the next psychological floor around $0.13 or lower. Technical breakdowns below critical support often increase the risk of deeper corrections, as previous analyses have shown DOGE facing renewed bearish momentum if it fails to hold near support levels.
Shiba Inu Pauses After Four-Day Rally, Holding Above 50-Day EMA
Shiba Inu surged nearly 12% on Sunday, breaking above the resistance trendline formed by the October 13 and November 11 highs. As of Monday, SHIB has pulled back slightly, down over 1%.
If the recovery continues, Shiba Inu could target the 200-day EMA at $0.00001065.
Similar to Dogecoin, daily momentum indicators show strong bullish momentum for SHIB. The RSI stands at 65, approaching the overbought zone, while the MACD has crossed above the zero line with increasing green histogram bars, signaling growing upward momentum.
On the downside, if SHIB falls below the 50-day EMA at $0.00000821, it would invalidate the recent breakout, potentially exposing the coin to a drop toward the October 10 low of $0.00000678.
Pepe Eyes Breakout Above 200-Day EMA
Pepe slipped nearly 2% on Monday after soaring almost 18% on Sunday, pausing its four-day rally that has surged over 77%. This pullback reflects resistance near the 200-day EMA at $0.00000749.
If PEPE breaks above this level, the rally could extend toward the September 25 low at $0.00000886.
The RSI stands at 79, indicating overbought conditions and potentially unsustainable buying pressure. However, the rising MACD suggests continued bullish momentum.
On the downside, a potential reversal in PEPE may test the former resistance, now support zone, around $0.00000650.
Market volatility often feels personal. One week, your investment portfolio appears stable; the next, it drops, headlines turn alarming, and every conversation sounds like a prediction. This emotional rollercoaster is normal, but panic selling can turn temporary market swings into lasting financial damage.
For high-net-worth families and business owners, the stakes are even higher. Investments are not for entertainment—they serve real financial goals like retirement income, business transitions, philanthropy, and preserving long-term wealth.
The good news is, successful investing doesn’t require perfect timing. Instead, it demands a consistent process that withstands diverse market conditions, volatile periods, and unforeseen events. The most effective market volatility strategies emphasize preparation, discipline, and risk management, all geared toward sustainable long-term growth.
Key Takeaways
Market volatility is a normal part of investing; having a rules-based plan helps minimize panic selling and costly mistakes.
Effective risk management begins with clear asset allocation, defined investment horizons, and practical guardrails.
Portfolio diversification works best when intentional and based on asset class exposure—not simply by increasing the number of holdings.
Regular rebalancing reinforces the discipline of “selling high” and helps reduce volatility over time.
Maintaining a steady investment psychology keeps investors focused on long-term performance rather than daily market fluctuations.
What Market Volatility Really Means in the Stock Market
Market volatility reflects shifting expectations. Stock prices fluctuate, bond yields change, and the market continuously reprices risk as economic conditions evolve. Factors such as inflation risk, interest rate changes, and unexpected news can quickly alter market values.
Volatility is not limited to equities. When interest rates rise, bond prices typically fall, often surprising investors who expect fixed-income assets to provide stability. In the bond market, price fluctuations are driven by interest rate risk, credit risk, and credit quality—especially in high-yield bonds and certain bond funds.
Not every market downturn signals a crisis, but each one tests whether your portfolio aligns with your risk tolerance and investment objectives.
Investment Psychology: Why Many Investors Make Costly Moves
During volatile periods, investment psychology can undermine sound judgment. Loss aversion makes market declines feel unbearable, while recency bias convinces investors that recent events will dictate future outcomes. Coupled with constant commentary on indices like the Dow Jones and “potential winners,” investors face emotional pressure from all sides.
Risk-averse investors are particularly vulnerable. When fear peaks, many abandon their original plans and move to cash at inopportune moments. Hesitation to re-enter the market thereafter can significantly harm long-term returns.
The solution is not bravado but structure. A well-designed, rules-based investment plan reduces the likelihood of reactive decisions during turbulent times.
Practical Risk Management Strategies for a Diversified Portfolio
During periods of market turbulence, the objective isn’t to predict headlines but to manage risk effectively and keep your balanced portfolio aligned with your long-term financial goals.
1. Start With Asset Allocation and Risk Tolerance
Asset allocation is one of the most important factors driving long-term investment performance. A well-designed allocation reflects both your risk tolerance—the level of risk you are comfortable with—and your risk capacity, which is more practical and considers your time horizon, liquidity needs, and how much additional risk your financial plan can realistically withstand without forcing unwanted changes.
If a market downturn would compel you to sell assets to cover life expenses, your portfolio’s overall risk might be too high for your situation. This is especially critical for business owners nearing liquidity events or investors approaching retirement, who need to ensure their allocation aligns with their unique financial circumstances.
2. Build Portfolio Diversification That Holds Up Across Market Conditions
Portfolio diversification is effective when your assets respond differently under the same market conditions. Simply owning multiple mutual funds tracking similar benchmarks can still expose you to a single dominant risk factor.
A truly diversified portfolio includes exposure to multiple asset classes, such as:
Equities across various sectors
International stocks for broader geographic exposure
Fixed income securities selected by credit quality and duration
Cash or short-term instruments to manage liquidity risk
This approach reduces overall portfolio volatility by not relying on a single market narrative. It also preserves long-term growth potential by avoiding overconcentration in any one area.
3. Use Fixed Income Investments With Eyes Open
Bonds can provide portfolio stability, but selecting the right bonds is crucial. Government and high-quality bonds often behave differently from corporate or high-yield bonds, especially during economic stress. Credit risk and duration significantly impact bond performance.
Rising interest rates typically cause bond prices to fall, particularly for longer-duration bonds. Bond funds may also experience unexpected market value fluctuations, and selling during market stress can lock in losses. Understanding interest rate risk, credit quality, and bond price sensitivity across economic cycles is essential.
Fixed income investments play an important role but should be tailored to your time horizon and investment objectives—not based on assumptions or market noise.
4. Rebalancing With Discipline to Manage Risk
Rebalancing is a disciplined approach to managing risk and maintaining a balanced portfolio. It helps prevent emotional trading by systematically adjusting your holdings back to your target asset allocation.
Over time, rebalancing reinforces the “sell high” discipline by trimming assets that have grown disproportionately and adding to those that have lagged behind. While it’s not a guarantee of gains, this method effectively controls risk and reduces portfolio drift during volatile market conditions.
5. Plan Liquidity to Reduce Forced Selling
Liquidity risk becomes a critical concern when cash is needed during a market downturn. Having a clear cash plan, maintaining an emergency reserve, and carefully timing large expenses can help minimize the risk of being forced to sell investments at unfavorable prices.
This strategy is especially vital for investors with irregular cash flows, upcoming tax obligations, or significant business expenses. A well-structured liquidity plan safeguards your long-term investment goals by preventing your portfolio from being tapped as an emergency fund.
THE ETERNAL SOVEREIGN 