Why Is Crypto Market Down Today? Bitcoin Dips 6%, Altcoins Wipe Out $258Bn

The cryptocurrency market faced a sharp decline in the past 24 hours, leaving traders and investors on edge. Bitcoin (BTC), the largest digital asset by market cap, plummeted over 6%, hitting a daily low of around $94,725. The sudden drop sent shockwaves through the altcoin market, with the TOTAL2 index—tracking altcoin performance—shedding more than 15%, wiping out $258 billion in value.

As market capitalization fell over 7%, settling at $3.58 trillion, uncertainty gripped the industry. Yet, amid the chaos, a few outliers like Baby DogeCoin ($BABYDOGE) and Movement (MOVE) stood resilient, posting unexpected gains.

What triggered this sharp selloff, and is the worst behind us?

What Caused the Crypto Market Crash?

Google’s Quantum Chip Stirs Bitcoin Security Concerns

Google’s announcement of Willow, its cutting-edge quantum chip, caused widespread concern in the crypto world. Willow is capable of completing calculations in under five minutes that would take the fastest supercomputers 10 septillion years—a period longer than the universe’s known age.

While this marks a milestone for technology, it raised alarms about Bitcoin’s cryptographic security. Bitcoin relies on difficulty adjustments for mining, which typically take longer than five minutes, theoretically making it vulnerable to quantum breakthroughs.

However, experts reassured investors that Bitcoin could counter such threats by upgrading its security protocols and recalibrating its difficulty settings.

Bitcoin Transactions by Key Players Raise Doubts

Market sentiment weakened further after reports showed the Royal Government of Bhutan transferring 406 Bitcoins—worth about $40 million—to QCP Capital. With Bhutan holding over 11,000 Bitcoins, such moves could create fears of sustained selling pressure.

Meanwhile, speculation arose that El Salvador might soften its pro-Bitcoin stance to secure a $1.3 billion loan deal with the International Monetary Fund (IMF), adding more uncertainty to the market.

Leveraged Traders Face Heavy Losses

The selloff intensified as liquidations surged in the leveraged trading market. Over 582,000 traders were liquidated in the past 24 hours, resulting in total losses of more than $1.7 billion. Long traders were hit hardest, accounting for $1.5 billion of these liquidations, which triggered a significant long squeeze.

The total open interest (OI) in crypto markets also dropped, falling from $138 billion to around $123 billion as speculative activity cooled.

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There’s Still Some Hope

Despite the market turmoil, institutional investors remained active in accumulating Bitcoin. The total Bitcoin supply on centralized exchanges decreased by over 10,000 BTC, bringing it to approximately 2.25 million.

Notably, BlackRock’s IBIT led U.S. spot Bitcoin ETF issuers in accumulating BTC, signaling confidence in a potential rebound and renewed bullish momentum in the near future.

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The crypto world may have stumbled today, but history shows it has a way of bouncing back stronger.

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