The post Crypto Crash Today: Why Are Bitcoin and Altcoins Dropping Heavily? appeared first on Coinpedia Fintech News
The crypto market is going through one of its toughest phases in months. While Bitcoin has managed to hold up relatively well, most altcoins have taken a sharp hit, leaving traders wondering why altcoins are crashing so hard right now.
Why Crypto is Dropping?
Crypto analyst Michaël van de Poppe explains that one major reason behind the steep fall is the limited tradable supply.
He points out that if only about 10% of an altcoin’s total supply is available for trading, any large sell order can shake up the market. For example, if someone decides to sell just 2% of the total supply, it can cause a big drop because the order books can’t absorb that much selling pressure, especially in a market where most traders have already been liquidated in recent weeks.
This thin liquidity makes altcoins more volatile; prices fall harder during downturns, but can also surge faster when sentiment flips bullish again.
“If you’re holding altcoins, be patient,” van de Poppe says. “The cycle hasn’t peaked yet.”
Bitcoin’s Dominance Is Rising
Another key factor behind the altcoin weakness is Bitcoin dominance, the percentage of total crypto market value held by Bitcoin.
Bitcoin dominance recently broke out of an ascending channel, showing that money is flowing out of altcoins and into Bitcoin. If BTC dominance breaks below 60.5%, it could ease some selling pressure on altcoins. But if it keeps rising, altcoins may continue to struggle.
Van de Poppe also compared today’s situation to late 2019, when Bitcoin was strong but altcoins kept falling for months until macro conditions improved and sentiment flipped, sparking a powerful altcoin rally.
Liquidity Crunch Hits the Market
Adding to the pressure, the U.S. government shutdown is creating a liquidity squeeze across financial markets, including crypto.
With Treasury spending on hold, about $1 trillion has built up in the Treasury General Account (TGA), draining reserves from the system and tightening liquidity. That’s pushing money market rates higher and pulling funds out of riskier assets like crypto.
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At the same time, Federal Reserve Chair Jerome Powell’s cautious comments about rate cuts have made investors more defensive. Bitcoin dropped below $108,000, and altcoins followed suit as trading volumes fell 20–40% since mid-October.
What’s Next for Altcoins?
Despite the gloomy picture, there’s still room for optimism. Historically, every time Bitcoin dominance peaks and altcoins lag, a strong comeback follows once liquidity improves and market confidence returns.
If the U.S. government resolves its shutdown soon, delayed economic data could start showing weakness, possibly pushing the Fed to turn more dovish. That could lead to a liquidity boost or even new quantitative easing (QE) measures in 2026, setting the stage for the next big crypto rally.
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FAQs
The crypto market is down due to low liquidity, investor caution, and rising Bitcoin dominance pulling funds from altcoins.
Altcoins have less tradable supply, so even small sell-offs cause sharp drops, while Bitcoin stays more stable during market stress.
Low liquidity makes it hard to absorb large trades, causing big price swings and deeper declines when sentiment turns bearish.
Altcoins may recover once liquidity returns, the Fed eases policy, and Bitcoin dominance starts to decline again.