Why Is Crypto Crashing Today and Will the Market Recover? Top Reasons
Why Is Crypto Crashing Today and will it recover? The global crypto market has just witnessed its largest single-day wipeout in history, plunging by 9.5% in 24 hours to a market cap of $3.83 trillion. More than $9 billion in leveraged positions were liquidated, erasing over $300 billion in total market value in one brutal trading session.
Trump Tariff Turned Uptober Into Downtober
The immediate trigger behind today’s sharp sell-off was President Trump’s sudden 100% tariff announcement on China, effective November 1, 2025. The move came after Beijing tightened rare-earth export controls, which the U.S. president called a “hostile act.” He posted the escalation on Truth Social, declaring new export restrictions on “any and all critical software.”
Source: Truth Social
Within minutes, S&P 500 futures nosedived by -3.5%, erasing $2.5 trillion in market value in just six hours. The S&P 500 closed -2.7% lower, its biggest one-day drop since April. Traders had been expecting a pullback for weeks as leverage soared and no major correction had occurred for six months. Trump’s post became the spark that set off the powder keg.
Source: X
Crypto, being a high-beta asset class, reacted violently. Bitcoin $BTC crashed 7%, falling from $121.42K to $104,953 before stabilizing at $112,627.28. Ethereum plunged 12%, now at $3,819.82. Solana tumbled 16% to $186.50, while XRP slid 14% to $2.42, as markets priced in geopolitical uncertainty and risk-off sentiment spread.
Source: CoinMarketCap
This is the clearest example yet of how “why is crypto crashing today” often has roots in traditional macro shocks like Trump China tariff news.
Powell’s Silence Adds Fuel to the Fire
Adding to the chaos was Federal Reserve Chair Jerome Powell’s silence on the upcoming October 29 FOMC meeting. Markets had hoped for clarity on possible rate cuts. Powell offered none, increasing speculation that no rate cut will be announced. This unexpected silence poured gasoline on the already burning markets, reinforcing the narrative of “why is crypto market down today.”
Meanwhile, the Fear and Greed Index collapsed from 64 (Greed) yesterday to 27 (Fear) today. Such extreme fear levels often signal panic selling — but for contrarian investors, they can hint at potential buying opportunities if the macro environment stabilizes.
Source: Alternative.me
Ongoing Hacks Deepen Market Anxiety
Market sentiment was further weakened by recent high-profile security breaches, including a BNB Chain hack, PancakeSwap account compromise, and a CZ hack alert. These incidents have shaken confidence in $DEFI platforms and centralized services alike, intensifying the risk-off wave.
Will the Crypto Market Recover Again?
Despite the intense sell-off, not everything points to a long bear phase. Several upcoming events could shift sentiment again, hinting towards “buy the dip” opportunity. The Solana ETF approval and $XRP ETF decision by the SEC are pending and could inject renewed optimism. The October 29 FOMC meeting remains a critical date — if Powell hints at policy support, it could reverse the “why is crypto crashing and will it recover” narrative. Historically, such sharp corrections often pave the way for powerful rebounds, especially if macro panic fades and institutional flows return.
Conclusion
Today’s crash answers the question “why is crypto crashing today” in one word: Tariffs. Trump’s China move collided with excessive leverage, Powell’s silence, and hacker fears to produce a record $300B wipeout. While panic dominates now, upcoming ETF approvals and Fed signals could turn this Downtober back into an Uptober. For long-term investors, fear often plants the seeds of future rallies.
Disclaimer: This is for educational purposes only. Always do your own research before any investment.
