The crypto market was in the red on Tuesday, with Bitcoin (BTC), Ethereum (ETH), Dogecoin (DOGE), and other digital assets experiencing significant declines.
The fall coincided with other risk-off events in global financial markets, with rising US Treasury yields, aggressive Federal Reserve action and macroeconomic uncertainty being the main triggers.
List of contents
Why Did the Crypto Market Suddenly Crash?
Rising US Treasury Yields Fuel Risk Aversion Sentiment
More Aggressive Federal Reserve Outlook
Macro Uncertainty and Broader Economic Concerns
BTC, ETH, DOGE, and Altcoin Price Action Amid Market Crash
Conclusion
Why Did the Crypto Market Suddenly Crash?
Rising US Treasury Yields Fuel Risk Aversion Sentiment
One of the main factors behind the decline was the increase in US Treasury bond yields. The 10-year bond yield rose to 4.70%, while the 30-year and 5-year bond yields rose to 4.61% and 4.50%, respectively.
Higher yields make traditional investments more attractive, causing capital to move away from riskier assets like crypto. This shift has also impacted other asset classes, including equities.
The Nasdaq 100 index fell more than 1%, with tech stocks like NVIDIA and Tesla taking big losses. Tesla shares, for example, fell 4.68% to $391.81 a share, wiping $19.24 off the stock's value.
More Aggressive Federal Reserve Outlook
The Federal Reserve’s monetary policy stance also weighed on markets. The minutes of its December meeting indicated that it expected fewer rate cuts in 2025 than previously projected.
Strong labor market data, including the JOLTS report showing job openings rising by 259,000 to 8.1 million in November 2024, has fueled concerns about continued inflation. That could mean tighter monetary policy, which historically has not been favorable for crypto.
Additionally, the ISM Services PMI report pointed to stable economic performance, reducing the likelihood of a significant interest rate cut by the Fed.
Macro Uncertainty and Broader Economic Concerns
Uncertainties in the U.S. economy, including fiscal policy under President Donald Trump and the rising debt ceiling, are adding to investor concerns. A rising fiscal deficit and an unclear Treasury strategy are making matters worse.
However, analysts like Arthur Hayes predict a short-term boost for crypto in Q1 2025 due to increased US dollar liquidity. However, this increase is likely to be temporary due to the need to replenish the Treasury General Account and the April tax season which could trigger further sell-offs.
BTC, ETH, DOGE, and Altcoin Price Action Amid Market Crash
The crypto market decline was significant, with major cryptos experiencing major losses accompanied by increased trading volumes reflecting panic among traders.
$BTC (BITCOIN): Prices fell 5.04% to $96,713, breaking through the psychological support level of $100,000. The 24-hour trading volume rose 13% to $55.12 billion, reflecting increased activity. BTC's market cap fell to $1.91 trillion.
$ETH (ETHEREUM): ETH fell 8% to $3,394 after failing to hold the $3,600 level. Market capitalization fell to $412.29 billion, with trading volume up 21% to $28.23 billion. High volatility indicates investor uncertainty.
$XRP : Value fell 5.66% to $2.29, with market capitalization down 6.03% to $131.29 billion. Trading volume jumped 57.57% to $6.95 billion.
$DOGE (DOGECOIN): DOGE fell 9.12% to $0.3546. Market capitalization dropped to $52.3 billion, while trading volume jumped 54% to $4.6 billion. The increased trading activity reflected mixed reactions, ranging from profit-taking to panic selling.
Conclusion
The current crypto market crash reflects how closely interconnected global markets are. Rising bond yields, tight monetary policy, and macroeconomic uncertainty are major challenges for digital assets.
However, there are still opportunities for short-term improvement, albeit with high risks. Investors are expected to remain vigilant and pay attention to global developments in making investment decisions.#OnChainLendingSurge 
