Main Causes of the Drop

1. Macroeconomic Factors

• Interest Rate Policies: A tightening of monetary policy by central banks, such as the U.S. Federal Reserve, reduces liquidity in the markets and negatively impacts high-risk assets, including cryptocurrencies.

• Global Economic Uncertainty: Geopolitical tensions and recession concerns affect investor confidence.

2. Mass Liquidations

• Leveraged liquidations on trading platforms are a common trigger for abrupt drops. When prices fall rapidly, leveraged contracts are liquidated in a cascade, amplifying the downward movement.

3. Lack of Confidence in the Sector

• Hacks or scandals: Negative events, such as security breaches on exchanges or issues with major projects, erode investor trust.

• Strict regulations: News of stricter regulations in key regions can lead to massive sell-offs due to fears about the future of the sector.

4. Market Sentiment

• Fear (reflected in indices like the “Crypto Fear & Greed Index”) dominates during periods of high volatility, leading to impulsive selling.