Crypto market crash: Why are Bitcoin and altcoins going down today?

A crypto market crash is happening, with Bitcoin plunging below the important support level at $121,000 and the total market capitalization of all coins falling to $4.15 trillion. Some of the top laggards in the crypto industry were coins like DoubleZero, World Liberty Financial (WLFI), Pi Network, Zcash, and Pi Network, which all plunged by over 10% in the last 24 hours. Crypto market crash triggered by high liquidations The first main reason why the crypto market crash happened is that liquidations surged in the last 24 hours, forcefully closing positions. Over 180,000 traders who were long cryptocurrencies were liquidated. Most of the liquidations happened with Ethereum whose positions worth over $170 million were closed. Bitcoin positions worth $160 million were liquidated, while Solana, XRP, and Dogecoin positions worth $48 million, $25 million, and $20 million were closed. The crypto market normally crashes when long positions are closed forcefully by exchanges, as this usually means more selling among investors. Crypto liquidations | Source: CoinGlass Crypto crash is happening because of profit-taking The other main reason why the crypto crash is happening is that investors are booking profits after a recent rally. Bitcoin price plunged to $120,000, a few days after it soared to a record high of over $126,000. Other cryptocurrencies also plunged after the recent rally because of profit-taking among investors. It is highly common for this profit-taking to happen after the crypto or stock market experiences a strong rally over time. Stock market crash amid AI jitters The crypto market crash is also happening because of the jitters in the stock market, where some investors are concerned about the AI bubble . One reason for this was a 2.52% crash in Oracle shares , which led to more downside among companies in the AI industry like Nebius and CoreWeave. The crash happened after a report by The Information warned that Oracle was struggling to profit from the ongoing AI boom despite the massive backlog. Investors are also concerned about the circular nature of the AI industry, where companies like Nvidia and AMD have announced massive deals with clients like OpenAI and Anthropic. For example, Nvidia announced a $100 billion deal with OpenAI that will see the latter buy its chips and possibly create to illusion of demand. The same is true with the latest deal between AMD and OpenAI. Altogether, OpenAI has announced deals worth over $1 trillion and analysts are questioning how it will ever generate a return on investment. Some analysts and investors, including Thoma Bravo, have started to warn of a potential bubble in the AI industry. Bubbles often pop at once as happened in 2000 or over an extended period. US government shutdown ending odds The other main reason why the crypto market is crashing is that investors now expect that the government shutdown will take a long period to end. Odds that it will happen on October 15 or later rose by 6% in the last 24 hours to $75%. Those between October 10 and 14 dropped to 23%. The government shutdown has implications on the crypto market. On the positive side, it is leading to more demand for Bitcoin, which is seen as a safe haven like gold. It is also a positive one as it is affecting the economy, which will push the Fed to cut interest rates. On the other hand, a prolonged shutdown means altcoin ETFs like XRP and Solana will take longer to be approved. The post Crypto market crash: Why are Bitcoin and altcoins going down today? appeared first on Invezz