Why Is The Crypto Market Down Today?

The total crypto market cap crashed sharply over the last 24 hours as the bullishness seemingly saturated. Bitcoin’s (BTC) price ended up noting a drop below $122,000 while Plasma (XPL) absorbed the largest hit amongst the altcoins, falling by 14%.

In the news today:-

• Canary Capital is close to securing approval for its Litecoin and HBAR ETFs after filing final details. However, Bloomberg’s Eric Balchunas noted the launches are unlikely to proceed during the ongoing US government shutdown.
• SEC Chair Paul Atkins announced plans to introduce innovation exemptions for Web3 firms by year-end, allowing limited regulatory flexibility. Progress is stalled amid the US government shutdown, as the Commission works to balance innovation with financial stability and oversight.

The Crypto Market Slows Down

The total crypto market capitalization stands at $4.11 trillion, maintaining support above $4.09 trillion despite recent volatility. The ongoing US government shutdown triggered a mild decline, weighing on investor sentiment. However, the broader market remains resilient, suggesting that the pullback may be temporary as participants await clarity on policy developments.

While demand for crypto assets has grown amid the shutdown, delays in ETF approvals have unsettled investors. The uncertainty led to panic selling in the last 24 hours, wiping roughly $109 billion from the market. This reaction highlights the market’s sensitivity to regulatory timelines and macroeconomic disruptions.

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Total Crypto Market Cap Analysis. Source: TradingView

If investor confidence returns and capital inflows strengthen, the total crypto market cap could recover swiftly. A move back toward $4.20 trillion appears achievable, signaling renewed optimism. Such a rebound would mark the beginning of a recovery phase, helping offset the recent losses driven by short-term uncertainty.

Bitcoin Falls Below $122,000

Bitcoin’s price has recorded its first red candle since the start of the month, signaling a pause in its bullish momentum. The crypto king also ended its streak of consecutive all-time highs, reflecting short-term exhaustion among traders following weeks of strong upward movement across the broader cryptocurrency market.

The latest decline pushed Bitcoin’s price down to $121,765, causing it to lose the critical $122,000 support level. This drop exposes BTC to potential downside risk, with the next key support sitting near $120,000. Market participants are closely monitoring whether selling pressure intensifies in the coming sessions.

Bitcoin Price Analysis. Source: TradingView

If investors maintain composure and avoid panic selling, Bitcoin could reclaim $122,000 as a support base. Sustained buying activity around this level may enable BTC to stage another rally, targeting a retest of its recent all-time high of $126,199 and restoring positive momentum in the near term.

Plasma Takes A Hit

XPL investors faced steep losses over the past 24 hours as the altcoin dropped 14% in a single session. The decline also pushed XPL below the crucial $1.00 support level, signaling growing bearish pressure and weakening market confidence among short-term traders reacting to intensified volatility.

Currently trading at $0.89, XPL appears vulnerable to additional downside risk. If selling pressure persists, the altcoin could fall toward $0.81 or even $0.71. Such a move may trigger further liquidation from nervous investors, amplifying the downward trend and delaying any potential recovery in the near term.

XPL Price Analysis. Source: TradingView

However, if XPL manages to reclaim $0.95 as a stable support level, market sentiment could shift. This recovery might pave the way for a rebound toward the $1.08 resistance mark. A successful breakout above that level would invalidate the bearish thesis.