Crypto Market Drops: Here Are the Main Reasons

The crypto market faced another significant drop, with total market capitalization decreasing by 3.8% to $3.12 trillion. It came dangerously close to a critical support level near $2.92 trillion. The majority of digital assets saw significant losses, while the Fear and Greed Index dropped to 15%, marking extreme fear not seen since March.

Main Factors Behind the Drop

Expectations around U.S. interest rates continue to pressure the market. Early November forecasts showed a 60 to 70% chance of a Fed rate reduction in December 2025. Fed officials, however, suggested that rates could remain high, adding uncertainty for investors in riskier assets.

Traders think the Fed won’t cut rates in December! pic.twitter.com/GdbtNIcpTx

— Crypto Rover (@cryptorover) November 16, 2025

When interest rates rise, borrowing becomes more costly, prompting investors to favor safer options. Cryptocurrencies, often influenced by tech stocks, fell along with companies like Nvidia and Palantir amid margin worries. This cautious sentiment led investors at all levels to cut back on exposure to volatile assets.

Peter Thiel has now sold his entire stake in Nvidia and 76% of his Tesla shares.

Michael Burry's entire portfolio is now short positions in Nvidia and Palantir.

Softbank has now sold its entire stake in Nvidia. pic.twitter.com/Vswf1koF6s

— Andrew Lokenauth | TheFinanceNewsletter.com (@FluentInFinance) November 16, 2025

U.S.-listed Bitcoin spot ETFs faced $278 million in outflows in a single day during the crash, with total outflows since late October reaching $1.3 billion. Ethereum ETFs lost nearly $500 million. According to on-chain data, long-term holders sold around 815,000 BTC, valued at $79 billion, a rare event that increased the selloff.

The Impact of Geopolitical Tensions

The market has also been affected by ongoing global uncertainty. Disputes between the U.S. and China on technology and infrastructure have limited liquidity and shaken confidence. Recent crypto regulations in both countries are adding further pressure.

As a result, investors are avoiding riskier assets. Prices of stocks, gold, and cryptocurrencies have fallen, while U.S. taxation of foreign crypto accounts has unsettled international investors.

🚨BREAKING: WHITE HOUSE TO TAX AMERICANS’ FOREIGN CRYPTO ACCOUNTS

A proposed IRS rule and CARF membership would let the U.S. government track Americans’ crypto abroad for taxation.🇺🇸 pic.twitter.com/aACArq5EgV

— Coin Bureau (@coinbureau) November 17, 2025

Analysts say these conditions make recovery harder. Volatility is expected to continue until interest rates, trade relations, or tech sector performance are clearer.

Bitcoin and Altcoin Performance

Bitcoin has been considerably affected by recent events, intensifying the market downturn. On Tuesday, BTC lost more than 6%, falling to $89,000 from its $126,000 peak in early October. It is now trading close to $91,000.

Most of the selling came from short-term holders. CryptoQuant reported that on November 14, holders with less than 1 million BTC sold 148,241 BTC at prices below their cost, triggering more losses. Other digital assets experienced significant losses as well:

• Zcash: -13.9%
• Uniswap: -9.6%
• Avalanche: -6.8%
• Cardano: -5.3%
• Ethereum: -4.2%
• Sui: -4.2%
• XRP: -3.7%

Notably, Hyperliquid rose 5.8% in one day. Aggressive buybacks and staking reduced supply and pushed the price up. $1.3 billion in buybacks removed 28.5 million HYPE, or 8.5% of the supply, and staked HYPE grew 60% over 30 days, showing how supply management can counter market weakness.

What to Expect Next?

Overall, indicators suggest a market facing continued pressure. Caution is noticeable among Bitcoin and altcoin investors as short-term holders cut back on exposure. Should the crypto market stay around $2.92 trillion and Bitcoin stay above $90,000, the market could regain stability and recover. Minor short-term volatility is still anticipated.