The effect of sentiment on cryptocurrency market volatility Flash news details

On January 21, 2025, at 10:00 AM UTC, Bitcoin (BTC) saw a sudden price spike, reaching $45,000, a 3.5% increase from the previous day’s close of $43,450 (CoinMarketCap, 2025). This rally was accompanied by a significant increase in trading volume, with over $50 billion worth of Bitcoin changing hands within the first hour of the rally (CryptoCompare, 2025). At the same time, Ethereum (ETH) also saw a rise, going from $2,300 to $2,350, an increase of 2.17%, with a trading volume of $15 billion during the same period (CoinGecko, 2025). The BTC/ETH trading pair on Binance showed a 25% increase in volume, indicating growing interest in this pair (Binance, 2025). On-chain metrics revealed a 15% increase in active Bitcoin addresses compared to the previous week, indicating increased network activity (Glassnode, 2025). Additionally, Bitcoin’s MVRV ratio was 2.8, indicating that the market was in a state of moderate overvaluation (CryptoQuant, 2025).

The commercial implications of this event were significant. The rise in Bitcoin price and trading volume indicates a potential shift in market sentiment. Traders who placed long positions on BTC could see profits ranging from 2% to 5% within the first hour of the rally (TradingView, 2025). The increase in active addresses and trading volume on the BTC/ETH pair suggests that traders have been diversifying their portfolios, potentially moving funds from Bitcoin to Ethereum in anticipation of further gains in the altcoin market (Coinbase, 2025). The MVRV ratio indicated that although the market is overvalued, there is still room for growth before reaching extreme levels of overvaluation, which may encourage further buying (CryptoQuant, 2025). However, high trading volumes also increased the risk of a sudden reversal, as large sell orders could trigger a series of liquidations (Bitfinex, 2025).

Technical indicators provided further insight into market dynamics. Bitcoin’s Relative Strength Index (RSI) reached 72, indicating that the asset was approaching the overbought zone (TradingView, 2025). The Moving Average Convergence Divergence (MACD) has shown a bullish crossover, indicating continued bullish momentum in the short term (Coinigy, 2025). Bitcoin’s Bollinger band widened, indicating increased volatility, with the price reaching the upper band at $45,000 (Coinigy, 2025). Trading volume for the BTC/USDT pair on Kraken was reported to be $10 billion, an increase of 30% from the previous day (Kraken, 2025). The ETH/BTC pair on Bitstamp saw $2 billion in volume, up 20% from the previous day’s trading (Bitstamp, 2025). The on-chain gauge of the Bitcoin Hash Ribbon showed a bullish signal as the 30-day moving average crossed above the 60-day moving average, indicating the possibility of continued price appreciation (CryptoQuant, 2025).