Bitcoin met a rocky start to 2025, with its first full week of the new year defined by extreme volatility.
After briefly recovering to a weekly high of $102,290 on January 7, the flagship cryptocurrency went on a downward spiral to end the week around a low just below $92,000 as a risk-off sentiment prevailed across the cryptocurrency market.
The total cryptocurrency market capitalisation dropped over 5% in the past seven days to $3.37 trillion, as Bitcoin’s dominance went up 2% during the same period.
Losses were even more pronounced across the altcoin market, with only a few top altcoins remaining in the green by late trading hours on Friday.
The Crypto Fear and Greed Index reflected a lack of investor confidence, with the metric hovering at neutral levels of 50 when writing.
Why did Bitcoin crash?
Bitcoin bulls started the week on a positive note, but strength waned as hawkish signals from the Federal Reserve hinted at prolonged higher interest rates, which dampened risk appetite across the market.
Two key economic reports further exacerbated the situation.
The Institute for Supply Management’s December PMI showed stronger-than-expected economic activity, coming in at 54.1, up from 52.1 in November.
Meanwhile, the November JOLTS report revealed a rise in job openings but hiring slowed, and the quit rate dropped to 1.9% from 2.1% in October. Many perceived this as a sign of potential uncertainty in the labour market.
Additionally, stronger-than-expected nonfarm payroll data released on Friday raised concerns that the Federal Reserve may not cut rates anytime soon, further dampening market sentiment.
Adding to the woes, fears of the US government, which recently decided to green light selling $6.5 billion worth of Bitcoin seized from darknet marketplace Silkroad, sparked fears of a looming sell-off that could add significant selling pressure.
Will Bitcoin go back up?
Apart from agreeing on Bitcoin’s long-term price target, analysts were mostly divided on its short-term trajectory.
Resonating a bearish note, analyst Eugene Ng Ah Sio said Bitcoin was retesting the December 5 range lows, and traders are weighing in on the idea that these levels might not hold. Pointing to the $90k support as key, the analyst speculated a drop towards $85k if the level doesn’t hold.
Similar insights came from Asymmetric VC fund founder Joe McCann, who expects the bellwether to test $75k if the $90k support breaks.
According to Swarn markets co-founder Philipp Pieper, current conditions are expected to hold as investors are awaiting to gain better clarity on incoming president Donald Trump’s crypto policies.
For now, a bullish case for Bitcoin was presented by prominent trader Rekt Capital, who believes a trend reversal is due soon.
Notably, BTC was showing signs of bullish divergence around its range low support at $91k.
This, paired with the fact that its current -15% pullback during week 7 of price discovery, positions Bitcoin for a reversal, in line with historical tendencies observed during previous bull market corrections.
Meanwhile, well-followed analyst Capt. Parabolic Toblerone remains optimistic, suggesting that Bitcoin has completed its 4th wave and is now entering the 5th wave.
He anticipates that this 5th wave could push Bitcoin to $210,000 before Valentine’s Day, marking a key blow-off top.
At press time, Bitcoin was trading at $93,509, down 4.3% over the past week.
The altcoin market held some gains this week, and the top performers were:
Sui
Sui (SUI) led the highest gains among the top 100 crypto assets this week.
The altcoin gained 11.2% over the last 7 days, trading at $5.01 at press time while its market was standing at nearly $15 billion.
Source: CoinMarketCap
The gains accumulated after announced robust growth within its DeFi ecosystem in its 14 report.
Per the report, the layer-2 network reached a peak TVL of $1.8 billion, with an average TVL of $1.4 billion, more than doubling over the previous quarter.
Meanwhile, its cumulative volume surged nearly 10 times compared to the previous quarter.
XDC Network
Over the past week, XDC Network (XDC) rose 10.7%, with its market cap soaring past $1.4 billion.
The price rally came along with a jump in its daily trading volume from $35 million to nearly $60 million at the time of publication.
Source: CoinMarketCap
The altcoin gained traction as it gained interest from its derivative traders, as seen from the rising open interest in its futures market.
Notably, the OI for XDC rose from $2 million to $5.85 million on Jan. 7.
Another factor fueling its rally was its advancements in the RWA tokenisation sector, which were marked by notable partnerships with Archax and InvestaX, two leading RWA platforms.
Fasttoken
Fasttoken (FTN) rose for 5 consecutive days with a weekly gain of 7.2% at press time along with a market cap of over $1.6 billion.
Source: CoinMarketCap
While no particular reason for the altcoin’s rally could be identified at press time, the majority of its gains likely followed over hype among its community members following a community Christmas event rewarding from a pool of 500 FTN tokens to its winners.
Meanwhile, whales have also taken an interest in the token, which has helped push prices higher over the past week.
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