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When it comes to comprehending the current volatility in the cryptocurrency market, numerous elements at work contribute to the negative attitude.

First and foremost, Friday, January 21, was the last day of option expiration, which frequently results in major market volatility. Finbold previously predicted that Bitcoin would see high volatility based on derivatives data.

Significant price volatility was on the horizon, according to the number of open futures contracts at the time, which Bitcoin (BTC) experienced initially on Thursday evening and into Friday.

According to statistics published on January 17 by on-chain monitoring platform Glassnode, “futures markets remain a powder keg for short-term volatility, with Perpetual Futures Open Interest at 250,000 BTC- a historically elevated level.”

Russia and Ukraine are at odds

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Furthermore, investors will be watching to see if the escalation of tensions between Ukraine and Russia has an impact on market price action in general in the coming days. Nonetheless, it is critical to remember that whatever the crypto market is experiencing may already be factored into its worth at this point.

Furthermore, Russia’s central bank called for a total ban on cryptocurrency last week, recommending that cryptocurrency trading, mining, and usage be made illegal.

According to the paper “Cryptocurrencies: Trends, Risks, and Measures,” cryptocurrencies provide an outlet for individuals to withdraw their money from the national economy since they risk weakening it and making the regulator’s job of maintaining appropriate monetary policies more difficult.

As a result, if both China and Russia decide to ban cryptocurrencies completely, their citizens will be denied the option to participate in this unique market.

Equity markets are also down

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Other financial markets, such as the Nasdaq, are experiencing a fall; after briefly recovering from the previous jump, the Nasdaq finished the week in negative territory, down 2.72 percent on Friday after briefly rallying earlier in the day.

Surprisingly, the current mood on the Nasdaq equities market is weaker than that of the March 2020 crisis, when the coronavirus pandemic began to disrupt global markets.

Looking at the charts, it is clear that the market is extremely negative. The blue line shows the actual price action of the NASDAQ Composite, and the red line expresses the market’s current anxiety and bearishness.

Furthermore, while looking at the general sentiment as measured by the Hulbert Nasdaq Sentiment Index, it is worth noting that the current data point is -70 percent. In contrast, the low in the March 2020 fall was -60 percent, meaning that current Nasdaq sentiment is currently lower than at the height of pandemic market anxiety.

Fear in the markets is at an all-time high

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When paired with the NASDAQ sentiment, the Bitcoin Fear and Greed Index stands at 13 – ‘Extreme Fear,’ with the current price of $35,404 as of Saturday, January 22.

This indicator, however, might fall below 10 in the coming days as social media fear rises, in tandem with more mainstream media coverage of the crypto market correction at this stage.

The fear and greed index is based on a variety of data points, including volatility, social media, and Google trends, among others, with the information allowing for the assessment of aggregated market emotion.

In a single day, the crypto market cap is reduced by $350 billion

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Bitcoin and other cryptocurrencies have seen their value plunge by hundreds of billions of dollars as the cryptocurrency market’s steep drop deepens.

Following a 12.02 percent decline the day before, the crypto market cap is presently at $1.62 trillion as of Saturday, January 22, 2019. As a result, the cryptocurrency market value fell by $356 billion in a single day, falling from $1.98 trillion to $1.62 trillion, a 5-month low.

According to the charts, Bitcoin had the biggest volume during the correction. Nonetheless, it can be observed that the RSI is currently at its lowest and most oversold level on a daily basis since the actual crash in March of 2020 and that the prior low points were hit during the moves in September 2019 and November 2018.

Next week will be a significant week to see market reaction; whether it is simply a typical correction or whether it will have a deeper plunge into the markets in which it will accelerate, and based on that, we are also seeing Bitcoin holding on to a $35,000 support level that is critical to monitor.

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