Crypto Market Takes a Hard Hit: Is This the Start of a Bigger Downtrend?

The crypto market suffered a massive blow as prices tumbled sharply on Sunday, signaling the beginning of a strong bearish phase. Bitcoin, Ethereum, and altcoins saw significant losses

The crypto market experienced a significant downturn on Sunday, with prices dropping sharply and signaling the beginning of a strong bearish phase. This crash coincided with a major selloff in the U.S. tech sector, heightening the panic among investors.

Several factors contributed to this crypto market crash. Firstly, there were failed breakouts and profit-taking that triggered the initial drop. Cryptos had been struggling to break past key resistance levels for weeks. Bitcoin hovered around $100K, Ethereum attempted to push beyond $3,500, and other major tokens showed little growth. This lack of upward momentum led traders to begin liquidating their profits from the previous bull run.

As early selloffs commenced, a chain reaction followed, leading to even deeper losses. The entire crypto market today failed to breach a valuation of $3.6 Trillion, and consequently crashed towards the current valuation of around $3.2 Trillion.

Another key factor was trouble in the U.S. tech sector, specifically with DeepSeek. The announcement of this powerful new AI from China, which reportedly operates at just 10% of the cost of ChatGPT while delivering similar performance, had a major impact. This news led to a massive stock dump, particularly in AI-focused companies.

Since crypto is highly correlated with tech stocks, investors began pulling out of risk assets—including Bitcoin and altcoins. This shift in preference towards safer investments contributed to the crypto market's decline.

Finally, the snowball effect of panic selling and stablecoin surge played a role. Once the crypto market experienced heavy selling pressure, it quickly escalated into full-scale panic. Investors rushed to secure their profits by converting their holdings into stablecoins.

The impact was clear—Tether USDT volume surged by 80% in the last 24 hours, reaching a massive $128 billion. This shift signals that investors are preparing for further downside and moving to safer assets while waiting for the market to stabilize.

As this wave of panic selling continues, the market could continue its decline in the short term. If Bitcoin and other major cryptos fail to find support, we might see another round of selloffs pushing prices even lower. However, long-term investors might view this as an opportunity—once the dust settles, a new accumulation phase could begin.

For now, caution is key—whether you’re holding or trading, keeping an eye on both crypto and traditional markets will be crucial in navigating this volatility.