Why Is Crypto Crashing? Will the Bloodbath Continue or Can It Recover?

By / / Crypto News, Daily News
Why Is Crypto Crashing? Will the Bloodbath Continue or Can It Recover?
Table Of Contents
  1. Why is Crypto Crashing and Will It Recover After the Bybit Hack?
  2. Why is Crypto Falling Today?
  3. ETF Outflows Add More Selling Pressure
  4. Mass Liquidations Accelerate Crypto’s Drop
  5. Fear and Greed Index Signals Market Anxiety
  6. Will Crypto Recover? Market Reaction and Future Predictions
  7. Conclusion: Will Crypto Rise Again?

Why is Crypto Crashing and Will It Recover After the Bybit Hack?

The crypto market is experiencing a sharp downturn, leaving investors questioning: Why is crypto crashing today? The global market cap has plummeted by 1.90% to $3.17 trillion, triggering panic and uncertainty. A mix of negative factors, including a massive Bybit hack, ETF outflows, and large-scale liquidations, has contributed to the current crash.

Why is Crypto Falling Today?

Bybit Hack Sends Shockwaves Through the Market

One of the biggest reasons behind the crypto market drop is the shocking Bybit hack. The leading crypto exchange suffered a major security breach, resulting in a $1.4 billion theft of Ethereum (ETH) and stETH from its hot wallet. Hackers swiftly liquidated the stolen funds on decentralized exchanges, accelerating the sell-off.

Bybit’s CEO, Ben Zhou, confirmed the incident, explaining that attackers exploited a planned fund transfer to gain unauthorized access to an ETH cold wallet. Fortunately, other cold wallets remained unaffected, and withdrawals have resumed. However, the crypto hacked event sent Ethereum tumbling nearly 3% to $2,727, while Bitcoin dipped by 1% to $98,091.

ETF Outflows Add More Selling Pressure

Another major reason why the crypto market is down today is the significant outflows from crypto ETFs. Institutional investors have been offloading their holdings, exacerbating the bearish momentum:

  • Bitcoin ETFs recorded a net outflow of $84.41 million, bringing total net inflows down to $39.53 billion.
  • Ethereum ETFs saw a daily outflow of $8.92 million, with total cumulative inflows standing at $3.15 billion.

These outflows indicate that investors are shifting to safer assets amid rising market uncertainty, intensifying the current decline.

Mass Liquidations Accelerate Crypto’s Drop

Adding to the downturn, mass liquidations have played a crucial role in today’s market slump. Over the past 24 hours:

  • 169,736 traders were liquidated, totaling $565.62 million in losses.
  • The largest single liquidation occurred on HTX, involving a BTC-USDT order worth $45.80 million.

The liquidation of long positions triggeredz a chain reaction, deepening the market’s bearish sentiment and driving further price declines.

Fear and Greed Index Signals Market Anxiety

The Fear and Greed Index Crypto reflects growing investor anxiety. In just one day, the index dropped from Greed (55) to Neutral (49), highlighting a shift in sentiment. This fear-driven sell-off is another major key factor behind today’s market decline.

Will Crypto Recover? Market Reaction and Future Predictions

Following today’s sharp decline:

  • Bitcoin is trading at $96,404.67, down 1.83%, with a market cap of $1.91 trillion and a 24-hour volume of $49.42 billion.
  • Ethereum has slipped to $2,682.07, losing 2.36%.
  • XRP dropped 2.56%, trading at $2.57.

Despite the bearish trend, several upcoming events could support a market recovery:

  • FOMC Meeting (March 18-19, 2025): If the Federal Reserve signals a shift toward more accommodative monetary policies, investor sentiment may improve.
  • Altcoin ETF Approvals: Pending ETF approvals for XRP, Litecoin, and Dogecoin could boost confidence and spark a rally.
  • Brazil Approves XRP ETFs: A significant step forward for mainstream crypto adoption, increasing optimism among traders.

Conclusion: Will Crypto Rise Again?

While short-term volatility is expected to continue, long-term investors remain hopeful. If regulatory developments and institutional support align favorably, a crypto market rebound could be on the horizon. For now, traders should stay cautious, monitor key support levels, and prepare for potential opportunities amid the turbulence.

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