Bitcoin Plunges Amid Fed Uncertainty And Massive Selloff

Bitcoin and the wider cryptocurrency market faced a dramatic rout on January 30, 2026, as a confluence of geopolitical tensions, institutional outflows, and leadership uncertainty at the U.S. Federal Reserve sent shockwaves through global risk assets. The world’s largest cryptocurrency, Bitcoin (BTC), plunged by as much as 6.3% in just 24 hours, settling around $82,500 by the close of trading, according to CoinGecko and other major crypto data providers. This marked a weekly loss of over 7%, extending a bearish trend that has gripped the market since the start of the year.

Bitcoin’s market capitalization tumbled to approximately $1.64 trillion, while the overall crypto market cap fell more than 5.3% overnight to $2.81 trillion, as reported by RTT News. The pain was not limited to Bitcoin: Ethereum (ETH) dropped more than 6% to trade near $2,740, while other leading tokens like XRP and Solana (SOL) were down 7% and 8% on the week, respectively. Even precious metals, typically seen as safe havens, weren’t spared—gold futures for April settlement dropped 3.5% and silver futures lost nearly 10%, a sign of just how widespread the selloff was.

Much of the recent volatility was triggered by a cascade of liquidations in the crypto derivatives markets. According to data from Coinglass, over $1.8 billion in crypto positions were liquidated in a single day, with Bitcoin alone accounting for nearly $793 million and Ethereum for $425 million. Long positions were hit hardest, making up around $1.68 billion of the total wipeout. Jinse Finance also reported that, just a day prior, total network liquidations reached $1.014 billion, with $901 million in long positions and $113 million in shorts getting wiped out. This forced unwinding of leveraged bets created a self-reinforcing spiral, as falling prices triggered margin calls and further selling.

The mood among investors has soured sharply. The Crypto Fear & Greed Index, a widely followed gauge of market sentiment, sank deep into the “extreme fear” zone, registering a reading of 16 on January 30, according to CoinMarketCap. This drop in confidence was echoed in the CMC Fear and Greed Index, which fell to 28 from 38 a day earlier. As the panic spread, trading volumes soared—24-hour turnover jumped more than 63% to $169 billion, highlighting the frenetic pace of activity as traders rushed to exit positions.

Several factors converged to create this perfect storm. First, rumors swirled that President Donald Trump would nominate Kevin Warsh, a known hawk, to replace Jerome Powell as Federal Reserve chair. The nomination was confirmed on January 30, ending months of speculation and sending a clear signal to markets that a more aggressive stance on interest rates could be in the cards. As RTT News reported, “Rumors regarding hawkish candidate Kevin Warsh getting nominated for the role spooked investors, resulting in a massive decline in cryptocurrencies and precious metals and a spike in the dollar's strength.”

Paul Howard, a senior director at Wincent, told The Defiant that the move appeared to coincide with a broader risk-off reaction rather than a fundamental shift in market expectations. “What was meant to be a bullish move for the markets rotating out Fed chairman to Warsh appears to have (at least) coincided with a broad risk sell-off the last 24h,” Howard said. “What we are seeing is more likely to be a knee-jerk.” Still, the prospect of a less dovish Fed rattled nerves, sending the six-currency Dollar Index up to 96.38 from 96.16 the previous day and weighing heavily on risk assets across the board.

Adding to the anxiety, U.S.-listed spot Bitcoin and Ethereum ETFs saw massive outflows. On January 29, spot Bitcoin ETFs posted $817.9 million in net redemptions, while Ethereum ETFs saw $155.6 million in outflows, according to SoSoValue and RTT News. These outflows marked the third consecutive day of redemptions and signaled a significant cooling of institutional demand—a key pillar of the 2025 rally. “Sustained outflows remove a major source of buy-side pressure and can prolong a downtrend,” noted one analysis, as large funds appeared to be reducing exposure amid the volatility.

Meanwhile, traditional markets were hardly a source of comfort. The Big Tech sector, which had fueled much of the recent optimism in equities, suffered a historic selloff. Microsoft’s value alone dropped by about $357 billion, marking the second-largest single-session loss in stock market history, according to DL News. This tech rout spilled over into crypto, compounding the risk-off mood and prompting investors to reassess their appetite for speculative assets.

Further complicating matters, the U.S. Senate’s last-minute attempt to avert a federal government shutdown lost momentum late on January 29. Republican Senator Lindsey Graham delayed a crucial funding vote, insisting on more money for the Department of Homeland Security. As a result, bettors on Polymarket now see a 61% chance of a government shutdown by January 31. The White House has previously warned that such shutdowns can leave the economy “flying blind,” and the crypto industry still hasn’t recovered from the damage inflicted by the October-November 2025 shutdown.

Market structure data paints a picture of broad-based capitulation. Long-term Bitcoin holders have been distributing coins into market weakness, adding to the sell-side pressure. Glassnode analysts observed, “Long-Term Holders remain active spenders. Over the past 30 days, LTHs have distributed >12K BTC/day on average, equivalent to ~370K BTC/month.” Bitcoin miners have also been consistently sending coins to exchanges, further contributing to the structural selling.

Looking at the week ahead, Bitcoin price predictions suggest continued volatility. Daily lows are expected to range from $73,711 to $83,566, with highs up to $84,209, based on aggregated forecasts. Technical analysts warn that the market may not have found a bottom yet, especially given the scale of recent whale capitulation. As ValeriusLabs put it, “bitcoin OG whale just flipped from $142M profit to $100K loss… when smart money capitulates this hard, we’re not at the bottom yet.”

For now, the path forward for crypto hinges on a delicate interplay of macroeconomic policy, institutional flows, and global risk sentiment. With uncertainty running high and the market still digesting a wave of forced liquidations, investors are bracing for more turbulence in the days ahead.

As the dust settles, one thing is clear: the crypto market’s recent plunge has been a stark reminder of its vulnerability to shocks from both inside and outside the digital asset ecosystem.