The recent crypto market crash can be attributed to several factors ¹ ²:
- *Declining Capital Inflows and Liquidity Crunch*: A significant drop in capital inflows, with a 63.3% decrease from $134.65 billion in December 2024 to $43.37 billion currently, has led to reduced investor appetite and increased price volatility.
- *Uncertainty Around ETFs and Regulatory Developments*: Ongoing regulatory challenges, such as the SEC's legal battle with Ripple, and unclear guidelines on ETFs and compliance standards have contributed to market uncertainty and downward pressure.
- *Fed Rate Cut Hopes Collapse*: The Federal Reserve's stance on interest rates, influenced by inflation data, has reduced hopes for a rate cut, making investors nervous and contributing to the crypto market's decline.
- *Geopolitical Tensions*: Escalating tensions in the Middle East, particularly Israel's military operation against Iran, have also impacted the market, triggering widespread liquidations totaling over $1.15 billion.
- *Market Sentiment*: The Fear and Greed Index has shifted towards bearish sentiment, indicating growing caution among investors.
Some notable effects of the crypto crash include ¹ ³:
- *Bitcoin's Price Drop*: Bitcoin's price fell to around $104,000, a 3.6% decline in 24 hours, with potential for further drops if it fails to hold $104K.
- *Altcoin Market Suffering*: Altcoins like Ethereum, XRP, Solana, and Dogecoin have followed Bitcoin's downward trend, with significant losses, including Ethereum's 7.5% drop and Solana's 7.2% decline.
- *Liquidations*: Over 247,000 traders were liquidated, with total liquidations hitting $1.15 billion, and potential for further sell-offs if Bitcoin drops to $95,800.