Bitcoin, Ethereum, and XRP collectively pull back, with ETF capital outflows and Federal Reserve expectations being key variables

After the weakening of rebound momentum in early January, the cryptocurrency market experienced a clear cooling this week, with the overall market capitalization evaporating by approximately $120 billion. The previous rally driven by spot ETF capital inflows failed to continue, and market sentiment quickly weakened under the dual pressures of macroeconomic and liquidity factors. Bitcoin, Ethereum, and XRP became the core assets leading the correction.

Changes in liquidity are a key trigger for this round of decline. Data shows that the US spot Bitcoin ETF, after attracting continuous capital inflows, experienced a significant reversal in mid-week, with a total outflow of about $729 million over two days. As a result, Bitcoin’s price quickly retreated from around $94,500, dropping to the $90,000 level at one point, with a weekly decline of over $4,500. ETF capital shifted from net inflow to net outflow, which is seen by the market as a clear signal of a short-term decline in risk appetite.

On the macro front, Federal Reserve monetary policy expectations also exert pressure on the market. As the market generally anticipates that the Fed will pause rate hikes at the January 29 meeting, the probability has risen to 86.7%. Risk assets instead experienced a “profit-taking” correction. The current interest rate range of 3.50%–3.75% is expected to be maintained for a longer period, weakening market bets on a rapid easing cycle. Upcoming employment and inflation data are also viewed as key variables influencing future policy paths and the trend of crypto assets.

Structurally, altcoins have experienced a more significant correction than Bitcoin. XRP’s price fell from a high of $2.40 to around $2.00, a decline of about 14%, nearly retracing half of its January gains. The $2.00 level is considered an important technical support, coinciding with the 50-day moving average. If this support holds, there may be short-term rebound potential; if broken, the price could further decline toward around $1.80.

For Ethereum, ETH’s price retreated from $3,300 to around $3,000, a decline of about 6%. Technical patterns show that ETH previously formed a symmetrical triangle, and it is currently in a phase of direction selection. A breakout upward could target $3,600 in the short term; conversely, falling below $2,900 might open a new downward space.

It is worth noting that despite short-term market pressure, the altcoin season index has rebounded from a low of 25 to 57, entering a neutral zone. This indicates that after a phase of adjustment, the market still retains some expectations for a structural rebound in the second half of January. The subsequent trend will still depend on further confirmation of capital flows and macro policy signals.