Why Crypto Market Is Down: What’s Driving The Latest Crypto Crash

Why the Crypto Market Is Crashing: Factors Behind Bitcoin’s Below $90K

The crypto market is experiencing a sharp correction, with global market capitalization sliding 4.92% to around $3.08 trillion in the past 24 hours. Bitcoin has fallen 6%, Ethereum is down 6.80%, and most altcoins and meme tokens have plunged between 5% and 20%.

BTC has even broken below the crucial $90,000 level for the first time in seven months — now trading nearly 29% below its October 6 all-time high.

This sell-off signals a surge in volatility and growing caution among traders. After months of strong gains, many investors are taking profits, especially with a batch of delayed U.S. economic data expected soon following the extended government shutdown. 

Source: Santiment

Market-Wide Decline With a Few Outliers

Crypto assets have lost significant value over the past week, with the total market cap shedding 13.5% as bearish sentiment intensifies. Bitcoin hovering near its seven-month low has added pressure on the broader market. Still, a handful of assets like Zcash (+7%), Monero (+5%), and Astar (+10%) have managed to post gains amid the weakness.

Across large-cap tokens, losses have been steep, amplifying trader pain as volatility spikes and risk appetite fades.

Bitcoin and Ethereum ETFs See Heavy Outflows Amid Sell-Off

As per ETF flow data from SOSO Value, “Bitcoin Spot ETFs have bled over $1.89B in four days, including a $254M outflow yesterday, revealing intense sell pressure as BTC fights to hold $90K.”

Ethereum Spot ETFs are under strong selling pressure, posting nonstop outflows this week. In just five sessions, over $911M has exited ETH ETFs, including a $182.8M drawdown on Nov 17, while ETH hovers around $3,000 and total ETF assets slide toward $18.7B.

Fear & Greed Index Plunges as Market Enters Extreme Fear

Based on market sentiment readings from the Fear & Greed Index shows market sentiment plunging into Extreme Fear, with the score dropping to 11, its lowest in recent weeks. This sharp decline reflects growing anxiety among investors as market conditions continue to weaken.

Just yesterday, the index was at 14, and a week ago it stood at 26, indicating a much milder fear-driven environment. Even compared to last month’s reading of 29, sentiment has deteriorated significantly. The accelerated shift toward extreme fear highlights the heightened volatility, uncertainty, and risk-off behavior dominating the crypto right now.

What comes next for Bitcoin after the $1.01 billion wipeout?

According to CoinGlass liquidation data, The 24-hour liquidation heatmap shows a massive wipeout across the crypto market, with Bitcoin leading at $561.67 million in forced liquidations as volatility intensifies. Ethereum followed with $173.50 million, while major altcoins like XRP ($43.42M) and ZEC ($36.19M) also faced heavy liquidation pressure.

In total, more than 180,975 traders were liquidated over the past day, contributing to a staggering $1.01 billion in market-wide liquidations. Long positions took the brunt of the damage, accounting for $718.44 million, signaling a dramatic unwind of leveraged bullish bets. The largest single liquidation was a $96.51M BTC-USD position on Hyperliquid, underscoring the scale of the market’s rapid correction.

Macroeconomic Pressure: Fed Turns Cautious

With key economic data delayed by the government shutdown, the Federal Reserve has taken a more cautious stance. Fed Chair Jerome Powell said further rate cuts are “not a foregone conclusion,” while Boston Fed President Susan Collins suggested rates may need to stay elevated longer.

Analysts warn that the Fed’s hawkish tone is a key driver of the sell-off, with Deutsche Bank’s Henry Allen noting that investors often underestimate how much Fed commentary impacts risk assets, including crypto.

Halving Cycle Fear Returns

Bitcoin’s April 2024 halving and its peak six months later mirror previous cycles, but institutional dominance has changed market behavior. Many traders fear the next phase — historically a major drawdown. Some are exiting early.

Bitwise CIO Matthew Hougan says retail sentiment is “so bad” that further downside is possible. Miners selling into weakness and leveraged positions getting flushed have created a fragile environment. Fear of repeating past cycles is driving price action more than fundamentals.

Crypto Still Moves on Emotion Despite Institutional Growth

Even with rising institutional involvement, Bitcoin increasingly trades like a macro asset, reacting to liquidity, the strength of the U.S. dollar, and policy shifts. According to Nansen’s Jake Kennis, BTC is now influenced more by institutional flows than predictable events like halvings.

But sentiment remains emotional: altcoins have collapsed, early optimism linked to Trump policies has evaporated, and speculative capital is shifting toward AI tokens, stablecoins, and prediction markets.

Next Levels to Watch

Bitcoin Price Analysis: Key Support Levels

For Bitcoin, the analyst is monitoring the $88,000 to $90,000 range as short-term structural support. A bounce from this zone could bring BTC back toward $94,000 or $97,000, while a confirmed breakdown could expose the mid-$80,000- $75,000 region.

Ethereum Price Analysis: Key Support Levels

For Ethereum, it remains to be seen whether price can reclaim above $3,000 with strong volume. A successful push back above could restore bullish confidence, while sustained weakness may send ETH toward $2,750 or even $2,600 in an extended correction.

This analysis is based on real-time market data, ETF flow trackers, liquidation dashboards, and macroeconomic commentary available at the time of writing.