Why Is Crypto Crashing Today? 4 Reasons and What Next for the Market

Why Is Crypto Crashing Today and Will it Trigger a Bull Run in 2026?

Is this sudden drop a warning sign or just another pause before the next move? That is the big question investors are asking as headlines flood in with fear-driven news. Why is crypto crashing today despite strong long-term demand and visible whale buying? To understand why crypto is down today, we need to look at data, macro events, and investor psychology together.

According to CoinMarketCap, the global cryptocurrency market cap stands at $3.04 trillion, down 1.3% in the last 24 hours. Total trading volume is $86.2 billion. Bitcoin dominance is 57.5%, while Ethereum dominance is 11.6%. Bitcoin price crashed 1.50% to $87,428.38, and Ethereum fell 1.29% to $2,928.82. 

Source: CoinMarketCap Website

In the same period, 59,155 traders were liquidated, with total liquidations reaching $125.75 million. The largest single order was a BTC-USD position worth $7.02 million on Hyperliquid.

Why Is Crypto Crashing Today? Top 4 Reasons

US Government Shutdown 2026 Fears: One of the main reasons why the crypto market is down is fresh concern around a US government shutdown 2026. Congress adjourned for Christmas without an agreement on a budget and a framework on how to pass a vote, thus heightening the possibility of a new shutdown on the next deadline on January 31. The previous long shutdown in 2025 did serious damage to risk assets, as it lasted for more than 36 days.

Silver Price Surge Attracting Giants: Another crucial aspect that is adding to the reason why crypto is falling is that capital is flowing to traditional instruments. Notably, as per The Kobeissi Letter’s observations, the prices of silver rose by more than 10% in a single day by breaching the $79 per ounce mark for the first time in history.

Source: The Kobeissi Letter 

Trust Wallet Hack Add Pressure: Simultaneously, there was damage to trust caused by the Trust Wallet hack that occurred on December 26. Official reports have it that more than $6.77 million was stolen, with exchanges such as ChangeNOW, FixedFloat, KuCoin, and HTX being used to channel the money. Of course, CZ was assuring that Trust Wallet would cover all losses.

Source: Trust Wallet X 

Epstein Files News and Market Uncertainty: There are also political headlines involved. News surrounding the releasing of the Epstein files, due to President Trump’s call for the DOJ to reveal those involved, added to the global uncertainty. Such major headlines are always likely to influence market participants to cut their exposure, hence the question of why is crypto crashing today.

What’s Next for the Market: Bull Run in 2026?

Despite the current crypto crash, smart money activity tells a different story. Lookonchain data shows Arthur Hayes bought 1.855 million LDO worth $1.03 million and 549,868 PENDLE worth $973,000. 

Source: Lookonchain data 

Fundstrat’s Tom Lee-linked Bitmine staked 74,880 ETH worth $219.2 million, while SharpLink Gaming redeemed 35,627 ETH worth $104.4 million. These moves suggest long-term confidence and support the classic “buy the dip” strategy and hints for a bull run in 2026.

Conclusion

Why is crypto crashing today comes down to fear, not fundamentals. US shutdown risks, silver’s surge, security concerns, and political noise triggered selling. Yet whale buying shows confidence. For investors, this phase looks more like consolidation than collapse.

YMYL Disclaimer: This article is strictly informational in nature and does not constitute an investment recommendation. Investment in cryptocurrencies is extremely volatile. It is always essential to do your own research before making any investment.