Why is Crypto Crashing? Here’s why crypto prices may crash

The cryptocurrency market experienced a significant downturn last week, shedding over $440 million in total market capitalization.

As of Monday, the overall market cap stood at $2.66 trillion, reflecting ongoing corrections despite the much-anticipated Strategic Bitcoin Reserve announcement by former U.S. President Donald Trump. Contrary to expectations, the news failed to ignite bullish momentum, with the market instead continuing its downward trajectory.

Crypto Market Drops to $2.61 Trillion Amid Volatility

Over the past week, the crypto market saw a steep decline from $3.11 trillion at Monday’s open to $2.61 trillion by Sunday’s close, marking a $440 million loss in market cap. This sharp drop triggered widespread liquidations totaling $3.64 billion, according to data from Coinglass.

The sell-off impacted major cryptocurrencies across the board, with Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), and Solana (SOL) all experiencing double-digit losses. Several factors contributed to this crash, including geopolitical tensions, regulatory uncertainty, and macroeconomic developments.

Trump’s Bitcoin Reserve Announcement Sparks Unexpected Market Reaction

One of the key events that shaped market sentiment was Donald Trump’s Oval Office exchange with Ukrainian President Zelenskyy and the potential introduction of new U.S. tariffs, adding an extra layer of uncertainty to global financial markets.

In addition, the White House crypto summit and the announcement of a U.S. Bitcoin reserve created a reaction that deviated from market expectations. Investors had anticipated that the Strategic Bitcoin Reserve would involve new Bitcoin acquisitions. However, the government instead confirmed that it would hold onto its existing Bitcoin, including confiscated BTC, rather than actively purchasing more.

This announcement disappointed many investors, leading to a further decline in Bitcoin’s price. Ian Balina, founder and CEO of Token Metrics, shared his thoughts in an exclusive interview with FXStreet: “The announcement about the Strategic Bitcoin Reserve is not what the market was hoping for. Many expected the Reserve to buy new Bitcoin, but instead, they stated they would not sell any of their existing Bitcoin or confiscated Bitcoin. While this is a positive move, it caused a sharp decline in Bitcoin’s price. Moreover, our market indicator for Bitcoin remains firmly bearish and has not shifted to a bullish stance despite this latest news.”

Trump Acknowledges Short-Term Economic Pain from Policies

Adding to the market’s concerns, Trump addressed economic uncertainty in a Fox News interview on Sunday, admitting that his policies could lead to short-term economic challenges. “If you look at China, they have a 100-year perspective … we go by quarters,” Trump said. “What we’re doing is building a foundation for the future.”

While Trump’s remarks indicate a long-term vision, the immediate impact on the financial markets remains uncertain. With Bitcoin and other cryptocurrencies struggling to regain bullish momentum, investors remain cautious about the road ahead.

As the crypto market navigates macroeconomic pressures, regulatory shifts, and geopolitical tensions, the coming weeks will be critical in determining whether recovery is on the horizon or if further corrections are in store.