crypto news: Crypto Crash: Bitcoin, Ethereum, XRP price drop explained. Here’s analysts deep insights, investor sentiment shift, ETF outflows, policy developments, trader liquidations, market panic
Crypto Crash: Fall in Bitcoin and Ethereum Prices
The latest crypto crash sent major digital assets plummeting; Bitcoin (BTC) and Ethereum (ETH) are down more than 6%. The global cryptocurrency market is under heavy selling pressure, pushing values to three-month lows.
Bitcoin fell as much as 6.4% on Friday morning to around $103,600, its lowest since June, before rebounding slightly to $105,700 at 9:30 a.m. Ethereum also followed this trend, dropping from its August high of $4,955 to $3,679.
In the broader market, Binance Coin (BNB) is down 10.6%, XRP is down 7.4%, Solana is down 8.3%, Tron is down 4.8%, and Dogecoin is down 8.7%. Total global crypto market cap dropped from $4.24 trillion to $3.76 trillion, according to CoinGecko.
What Triggered the Crypto Crash?
The crypto crash appears to be linked to increasing credit problems in the US banking sector. While Zions Bancorp announced that it had lost $ 50 million due to bad loans, Western Alliance announced that it would file a lawsuit against the debtor due to alleged fraud. These events follow the recent bankruptcies of auto lender First Brands and Triocolor Holdings.
These banking problems sparked concerns on Wall Street; The volatility index rose to 28.99, its highest level since U.S. trade tariffs were announced in April. JPMorgan CEO Jamie Dimon warned that regional banks could face deeper credit problems going forward. As a result, $593 million was withdrawn from US-listed Bitcoin and Ethereum exchange-traded funds (ETFs) in one day.
Investor Sentiment Shifts Toward Safe Haven Assets
Amid the crypto crash, investors turned to gold and silver as safe-haven assets. Recent U.S. government shutdown fears have increased uncertainty and pushed traders toward more stable options. Although Bitcoin was previously seen as a hedge during economic fluctuations, it has now moved in tandem with other risk assets. LPL Financial strategist Adam Turnquist said shutdowns often create short-term turbulence in markets. Bitcoin, which soared during previous government policy changes, now faces stronger correlations with traditional financial systems as institutional investors gain exposure through ETFs and state-level initiatives.
Investor Liquidations and Market Panic
Another major reason for the crypto crash is the widespread liquidation of leveraged long positions. Many investors believe that the rise in Bitcoin and altcoins will continue. When prices fell, automatic liquidations triggered further declines, accelerating sales. More than $19 billion in leveraged positions were wiped out in a single session.
Overall crypto market capitalization dropped to $3.57 trillion and daily trading volume was $234 billion. Approximately 97 of the top 100 cryptocurrencies recorded losses, indicating the broad impact of this correction.
Deeper Correction Potential
Analysts warn that the crypto crash could deepen if Bitcoin falls below the $99,900 level. Glassnode analysts wrote that a drop below this point could trigger another selling wave. Currently, Bitcoin is trading around $105,732 while Ethereum is trading at $3,764, down 13% and 17% respectively in a week.
The crypto fear and greed index dropped to 28, indicating strong fear among investors. This level was last seen in April. Experts say this sentiment can lead to panic selling, but it can also present opportunities for long-term investors to buy at lower prices.
ETF Exits and Policy Developments
US Bitcoin ETFs saw outflows totaling $536 million on Thursday, while Ethereum ETFs lost approximately $57 million. Ark & 21Shares recorded the largest withdrawal with $275 million, followed by Fidelity with $132 million. BlackRock’s ETH fund saw a modest inflow of $47 million, but Grayscale saw an outflow of $69 million.
Meanwhile, lawmakers in Florida introduced House Bill 183, which would allow the state to invest up to 10% of its General Revenue and Budget Stabilization Funds in Bitcoin and ETFs. This move signals that institutional interest in crypto continues despite market volatility.
Crypto Market Outlook
The current crypto crash reflects both macroeconomic uncertainty and internal market mechanics. Analysts believe short-term volatility may persist due to regional banking stress and leveraged liquidations. However, the long-term view is that Bitcoin and Ethereum will continue to develop as integral parts of the financial system with increasing institutional adoption.
FAQ
What caused the latest crypto crash?
The crypto crash was due to US banking credit issues, ETF outflows, leveraged investor liquidations, and investors’ growing fears of economic uncertainty and possible market-wide volatility.
Will Bitcoin and Ethereum recover soon?
Analysts say the recovery depends on market stability. If Bitcoin holds above $100,000, short-term recoveries are possible, but deeper corrections may occur if the selling pressure continues.
