The cryptocurrency market experienced a sharp decline in January 2025, raising questions about the future of these digital assets. Here are the main reasons that led to this decline:

  1. Strong US economic data: Indicators such as the December Purchasing Managers’ Index (PMI) rose to 54.1 from 52.1 in November, indicating a rebound in economic activity. The November Job Openings Report (JOLTS) also showed an increase in the number of open jobs. This strong data has raised expectations that the Federal Reserve may delay interest rate cuts, which has dampened investor appetite for riskier assets, including cryptocurrencies.

    Profit-taking: After the huge gains made by cryptocurrencies in 2024, many investors took profits at the beginning of the new year, which led to increased selling pressure and a decline in prices.

  2. Liquidation of long positions: The market saw a significant increase in liquidation of Bitcoin long positions, with $85.4 million worth of these positions being liquidated, which increased selling pressure on the price.


  4. The impact of the policies of the Federal Reserve and the new US administrationWith anticipation of possible changes in the US Federal Reserve’s policies in 2025, and market expectations regarding the policies supporting crypto assets by US President-elect Donald Trump, a state of uncertainty prevailed among investors, which negatively affected the prices of digital currencies.


  5. Mt. Gox Dividend Impact: The announcement by bankrupt bitcoin exchange Mt. Gox that it will begin repaying victims using assets stolen from the 2014 hack in July 2024 has raised market fears of oversupply, as beneficiaries potentially sell bitcoin that has risen in value significantly since their initial investment.

What do you think? Do you expect the market to recover again or will we witness a long-term recession?