Correct, but that doesn't mean there is 1.7 trillion USD in the market.

Think of it like this. I create a coin that has a supply of 10 million. I then sell a single coin to my friend for $10. My coin's marketcap would now be $100 million, despite the fact that only $10 has changed hands. This is an extreme example, but the same principle applies.

Only a small amount of the bitcoins in circulation are currently being traded or locked up in various orders. Looking at Coinbase Pro right now, the price is $7,156. There are buy orders for 200 bitcoins between that price and $7,058. Lets say sell 200 bitcoins to fulfill all those buy orders. I would take about $1.4 million out of the market. The marketcap (if calculated solely from Coinbase Pro), however, would drop by (18 million * (7156-7058)) = $1.7 billion, so over 1000x as much.