Why Are Cryptos Crashing? Reasons You Might NOT Know

The crypto market has taken a massive hit in the past 24 hours, with total market capitalization dropping below the crucial $3 trillion mark, currently sitting at $2.98 trillion. This sharp decline of over 7% signals a potential further slide in crypto prices. Market sentiment is turning increasingly bearish as Bitcoin inches closer to the critical psychological level of $90,000. If Bitcoin fails to hold above this mark and drops lower, it could trigger an even more severe crash, dragging altcoins further into the red.

Total crypto market cap in USD - TradingView

Why is the Crypto Market Crashing?

1. Overall Crypto Market Downtrend

The entire market is experiencing a broad sell-off. Bitcoin, the leading indicator of crypto sentiment, is struggling, which affects the entire ecosystem. Historically, altcoins tend to crash harder and recover slower than Bitcoin , leading to increased fear among investors.

2. Federal Reserve’s Tight Monetary Policy

The Federal Reserve continues its quantitative tightening (QT) policies, signaling that interest rate cuts are unlikely in the near future. Higher interest rates make risk assets like cryptocurrencies less attractive, leading to more sell-offs. Additionally, uncertainty remains about whether Donald Trump’s administration will implement the "Strategic Bitcoin Reserve" plan, which could provide a massive boost to Bitcoin but has yet to materialize.

3. Stock Market Weakness Affecting Crypto

The correlation between the crypto market and traditional financial markets remains strong. Last week, the SP 500 experienced its worst day in two months, falling by nearly 2%. A weak stock market often translates to a weak crypto market, as institutional investors adjust their risk exposure.

4. Bybit Hack Shaking Investor Confidence

A recent security breach at Bybit, a major crypto exchange, has heightened fear among investors. Many traders are now hesitant to enter the market, reducing overall buying pressure and leaving prices vulnerable to further declines.

Top 5 Crypto Losers in the Crash

The market-wide decline has hit some cryptocurrencies particularly hard. Here are the biggest losers in the past 24 hours:

1. RAY (-30%) – Raydium took a massive hit, leading the crash among altcoins.
2. LDO (-18%) – Lido DAO suffered heavy losses as DeFi tokens faced increased selling pressure.
3. BONK (-17%) – The meme coin frenzy cooled down, causing BONK to drop significantly.
4. TRUMP (-16%) – The political token hype faded, leading to a sharp decline.
5. PYTH (-15%) – Pyth Network saw a steep sell-off as confidence in the market waned.

As the crypto market remains volatile, traders are closely watching Bitcoin’s $90,000 level. If further downside is seen, expect more pain ahead for altcoins and the entire market.