What Happened in Crypto Today: Why Crypto Is Crashing?

What Happened in Crypto Today: Main Reasons Behind the Market Downturn

The digital asset prices have taken a sharp downturn, leaving many observers asking what happened in crypto today, and why crypto is crashing. The crypto market experienced a sudden fall after a brief bull run, with rising interest rates, a looming U.S. government shutdown, and broader economic uncertainties all weighing on digital asset valuations. Cryptocurrencies, often presented as an alternative to traditional finance, appear to be trading in tandem with risk assets like growth stocks, responding negatively when interest rates increase. 

Notably, the U.S. Federal Reserve’s decision to cut rates recently was overshadowed by lingering inflation fears, causing 10-year government bond yields to climb another 6 basis points, totaling a 64-basis-point rise over the past year. Historically, such rate hikes have been associated with downward pressure on crypto valuations, a pattern clearly emerging again.

Rising Yields, Government Funding Woes, and Immediate Market Fallout

In Washington, policymakers continue to scramble to pass a government funding agreement before a critical deadline. If a shutdown occurs, some 3.5 million federal workers could face delayed paychecks, including many who would be mandated to work without compensation. Federal contractors, lacking guarantees of backpay, face even greater uncertainty. The direct influence of this can be seen in several industries including finance, traveling, and the crypto industry. 

Since 1977, the U.S. has encountered 20 funding gaps, with the current standoff potentially leading to a 21st episode of prolonged disruption. With the U.S. Securities and Exchange Commission (SEC) preparing for limited operations, routine tasks such as reviewing exchange-traded fund (ETF) applications may be stalled. The whole scenario and sudden crypto market fall point questions towards the newly elected US president, Donald Trump. 

Trump’s Recent Victory: A Good Sign for the Crypto Market? 

The current unease follows the recent political victory of Donald Trump, an event that initially prompted a surge in major cryptocurrencies. Bitcoin surged to an all-time high of $108,268.45 on December 17, 2024, shortly after the election results. However, that excitement proved short-lived. Within days, Bitcoin slipped to $94,881.63, with Ethereum, Solana, and meme coins like Dogecoin also retracing significantly. 

Following the announcement, Bitcoin experienced a sharp 8% decline, falling from $102.34K to $94,390.46 at press time, with a market cap of $1.87T and a 24-hour trading volume of $106.47B. In contrast, Ethereum plunged by over 14%, dropping to $3,192.49 with a market cap of $384.42B and a 24-hour trading volume of $67.87B.

Additionally, Dogecoin (DOGE), the king of the meme world, saw a sudden 22% drop in a day, currently trading at $0.2855 with a market cap of $41.97B and a 24-hour trading volume of $11.14B.

The downturn underscores the delicate balance the crypto market is trying to maintain. While Trump’s win initially appeared to signal a favorable environment for digital currencies, the ensuing rise in interest rates, government funding uncertainty, and diminished regulatory oversight have contributed to heightened anxiety, driving down the value of digital assets and challenging the market’s long-term resilience.