As each crypto week unfolds, new developments shape the path of cryptocurrencies, notably Bitcoin, which moved sideways on January 18th. Trading volumes have declined from the prior week, yet looming macro events are set to steer the next major shift in the market.
Key Crypto Events That May Drive Volatility This Week
As liquidity dries up over the crypto week ahead, key decision points merge to pressure sentiment. A Federal Reserve liquidity operation, an FOMC economic statement, a pivotal Supreme Court decision, a Trump announcement and a Japan rate call all hit within the same brief span of time.
It all kicks off on Monday with a $15 Fed liquidity injection via T-bill operations. That action adds short term cash to funding markets and supports money market funds. Higher cash levels may incentivize traders to keep or add leveraged positions in popular coins.
Tuesday will see the FOMC’s economic report. It revises official views on growth, inflation, the trajectory of interest rates and more. Macro funds that tie crypto exposure to real yields hang on every line.
Markets are watching for the U.S. Supreme Court decision on Trump tariffs, which is expected the same day. A decision to either maintain or scale back those duties would shift trade expectations, as well as currency flows and appetite for riskier assets.
Trump, Fed and Japan Keep Markets on Edge
Wednesday brings a planned Trump update as he addresses the World Economic Forum in Davos (Jan 19-23). Despite being billed as a broader economic and policy narrative. It left crypto traders treating it as another headline-risk catalyst, keeping volatility higher and financial markets on tenterhooks of any clues on regulation, trade or capital flows.
On Thursday turned to the Fed’s balance sheet update. Traders were looking over the numbers for signs of tightening or discrete easing. Liquidity is often driven by balance sheet trends, and liquidity undergirds crypto. If runoff decelerates, risk could jump. That would indicate that last week’s injection was no one-off.
Japan’s rate decision is up next, closing the series on Friday. After BOJ rate hike, policymakers will decide whether to do so again or hold them steady. A hike would raise yields and may also bolster the yen. That move typically puts pressure on global carry trades. Funds that borrow at attractive rates to buy volatile assets might cut back on exposure to Bitcoin and other tokens.