A crypto market crash is happening today, January 29, with Bitcoin and most altcoins erasing most of the gains they made on Wednesday. Bitcoin price dropped to $87,500 from this week’s high of over $90,000.
XRP price dived by over 1.5% to $1.65, while Zcash fell by 6.65%. The other top laggards in the crypto market included tokens such as River, LayerZero, Tezos, Story, and Pi Network.
Crypto Market Crash is Happening Amid Geopolitical Risks
The main reason why the crypto crash happened is the rising fear that Donald Trump will attack Iran, a move that will lead to a conflict in the Middle East. Trump warned the regime to negotiate on its nuclear weapons program, and that failure to do so would attract a big attack.
Iranian leaders have insisted that they were ready to negotiate with the United States. At the same time, they have warned that an attack will lead to a major response, including attacking Israel, US military bases, and closing the Strait of Hormuz.
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Data from Polymarket show that the odds of a US attack have jumped in the past few days, which is one of the main reasons gold and silver prices have soared to record highs this year.
Contrary to popular belief, Bitcoin is no longer a safe-haven asset as it always drops whenever risks emerge. For example, the Bitcoin price dropped sharply when Trump threatened to take Greenland. It also fell after he warned of imposing tariffs on key NATO allies such as Germany, France, and the UK.
Additionally, the Bitcoin price crashed on October 10 after Trump warned of tariffs on Chinese goods. That crash triggered a $20 billion liquidation in the crypto industry.
Microsoft Earnings and Federal Reserve Interest Rate Decision
The ongoing crypto market crash comes after Microsoft published its quarterly results, which showed its cloud computing business slowed while its spending surged to a record high due to its AI initiatives. Azure, its cloud unit, fell to 37% from 38%, leading to a 7% stock crash.
Microsoft’s slow growth is important as it has become one of the main spenders in the artificial intelligence industry. It is NVIDIA’s biggest customer, accounting for over 20% of its revenue. Therefore, a potential spending slowdown would affect the broader stock market.
The crypto market crash is also unfolding as traders react to the Federal Reserve’s first interest rate decision of the year. As was widely expected, the bank decided to leave interest rates unchanged between 3.50%and 3.75%.
Additionally, the crypto market crash is underway as Bitcoin and Ethereum have formed risky bearish flag patterns, which point to an eventual breakdown in the coming days or weeks.
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