Crypto Market Crash Shakes Bitcoin, XRP Price, Here’s Why

The crypto market has seen a severe decline and Bitcoin, Ethereum, and XRP price have been among the most affected assets.

In the last 24 hours, there has been an increase in sell-offs and liquidations. This is due to several economic and market conditions.

Bitcoin, Ethereum, and XRP Price See Significant Losses

Bitcoin price fell by 7.2% and traded between $106,500 and $98,800 on CoinMarketCap. Similar to Bitcoin, Ethereum fell by 9% and was trading at just above $3,500.

XRP was the biggest loser among the largest cryptocurrencies, down 19% to $2.2 from $2.6.

Similar to other Cryptocurrencies, Solana (SOL) also faced the heat and slid under $200, erasing almost 12% of its value.

Combined, these losses caused over $800 million in liquidations in one day, as per the data from CoinGlass.

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Hawkish Federal Reserve Sparks Investor Concerns, Bitcoin Price Recovers

According to analyst Ali Martinez, the Federal Reserve’s policy change has become one of the main reasons for the crypto market crash.

After the latest FOMC meeting, the Fed Chair Jerome H. Powell stated that the board has decided to cut the interest rate by 25 basis points to 4.25–4.5%.

Although the rate cut was as expected, Powell’s remarks on the “higher-for-longer” inflation path affected the market negatively.

The central bank shifted its inflation forecast for 2025 from 2.1% to 2.5%. This indicates a slower pace of rate cuts in the next year.

Concerns arising from the unpredictable inflation and monetary policy forced investors to avoid any investment risks, including cryptocurrencies.

Although the cryptocurrency market is undergoing fluctuation, the price of Bitcoin recovered to and even surpassed $100K. It stood at $102,300 at the time of writing.

Likewise, the price of XRP staged a comeback to $2.41 as Ethereum price neared the $3,700 mark.

However, as mentioned earlier, analysts are still quite cautious. Since market sentiment may continue to fluctuate in the coming days.

The recent cut in the expected number of rate cuts by the Fed to two in 2025 from the previous expectations of four has elicited concern on decreased financial flows towards high-risk investments.

Additional Factors Contributing to the Sell-Off

Apart from the Federal Reserve’s policy stance, the crypto market also witnesses high volatility.

Swings in Bitcoin price and other cryptos, often triggered by emotions and speculative activities also accelerated the selloff.

Given that the market for cryptocurrencies is very much driven by sentiment, it is highly volatile and price can fluctuate significantly and with no particular notice.

This volatility on the other hand is good for short term traders but poses a problem to long term investors.

Increased cases of panic selling also impacted the market crash. While the prices of Bitcoin and other cryptocurrencies went down the drain, panic set in among the investors causing others to follow suit.

This FUD ( fear, uncertainty and doubt) led to further prices falling as investors tried to cut their losses.

Need For Regulatory Clarity

Additionally, the lack of clarity regarding the legal framework is still another key factor that affects the market.

There is still much uncertainty as to how cryptocurrencies should be defined and how their use should be regulated.

In some areas, tough rules or even complete prohibition has led to the investors’ concern which in turn led to withdrawal of funds.

Earlier on, Arthur Hayes had forecasted a disaster in the crypto market around Trump’s second inauguration in 2025 due to expectations of a swift policy change from investors.

The expert pointed out some political barriers such as having a small Republican majority in Congress and the fact that the next midterm elections are scheduled for 2026 as factors that hindered the fast-paced adoption of market-oriented policies.