A crypto crash affecting Bitcoin and altcoins is happening today, Dec. 5. Bitcoin price has dropped by over 2% in the last 24 hours, while the market capitalization of all coins dropped by 2.46% to $3.1 trillion. Some of the top laggards were tokens like Bittensor, Canton, Telcoin, Near Protocol, and Hyperliuid.
Why the Crypto Crash is Happening Today
The ongoing crypto market crash is happening as investors book profits after the recent rally that pushed Bitcoin and other altcoins higher. Bitcoin rose to $93,000, up from last month’s low of $80,000.
The rally happened after Vanguard, the second-biggest asset manager in the United States announced that it would start offering crypto ETFs, in a major shift. Charles Schwab also announced that it would start offering crypto trading services in January this year.
The crypto market rally also happened after Paul Atkins, the head of the Securities and Exchange Commission (SEC) announced that he would offer an innovation exemption for the crypto industry in January.
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At the same time, there are signs that Donald Trump will replace Jerome Powell with Kevin Hassett, a White House official who shares Trump’s views on interest rates. Ethereum also launched the Fusaka upgrade this week.
Therefore, the crypto crash is happening as investors sell the news and wait for the next key catalyst. In a statement to BanklessTimes, Alexis Sirkia, the head of the Yellow Network said:
“The crypto market has had to digest several important catalysts this week, including the Vanguard news. This pullback is, therefore, a pause as investors wait for the next big thing. We believe that this is not the end of the comeback.”
The crypto crash is also happening as open interest in the futures market remains low, and the Fear and Greed Index is in the red. Futures open interest dropped by 2.30% to $131 million.
ETF inflows are mixed, with Bitcoin shedding over $142 million in assets this week and Ethereum recording just $9.3 million in inflows.
Is this the Start of a New Crypto Bear Market?
There are signs that this is not the start of a crypto bear market as key catalysts remain. One of them is that some of the biggest crypto buyers are continuing with the process. BitMine’s Tom Lee and Strategy’s Michael Saylor have continued to accumulate Ethereum and Bitcoin.
At the same time, the Federal Reserve will meet next week and possibly cut interest rates as most analysts expect, with odds of a cut rising to 90% on Polymarket. The crypto market normally does well when the Fed is cutting rates as it did during the pandemic. Also, there are signs that the bank may start quantitative easing (QE) next year.
Therefore, there is a likelihood that the crypto market will have a Santa Claus rally once this selling pressure ends.
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