A crypto crash is underway, costing investors billions of dollars. The price of Bitcoin has plunged below $85,000, while popular names like Cardano (ADA), IOTA (IOTA), JasmyCoin (JASMY), and Pi Network (PI) are down by double digits in the last few weeks. So, why are crypto prices down, and what will happen next?
Fear and Greed Index Falling
The crypto market is usually driven by fear and greed. When things are going well, investors typically embrace greed and the fear of missing out (FOMO), which drives prices higher over time.
Conversely, when circumstances change, greed transforms into fear, and many investors panic and dump their tokens. This is happening now as the crypto fear and greed index has dropped to the fear zone of 34. Similarly, the altcoin season index has plunged to 14.
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Nasdaq 100 and S&P 500 Fall Below 200-Day Moving Average
Another reason for the crash in crypto coins like Cardano, Jasmy, IOTA, and Pi Network is the concurrent decline in American equities. The blue-chip S&P 500 and Nasdaq 100 indices have both plunged below the 200-day Weighted Moving Averages (WMA). This drop is a sign that bears have prevailed and that they may continue falling in the near term.
These indices have also crashed as the fear and greed index moved to the extreme fear zone of 18. They have dropped because of the fear that the US may enter a recession due to Trump’s tariffs.
American stocks closely correlate with cryptocurrency prices, as both are viewed as risky assets.
Bitcoin Price Double Top Caused the Crypto Crash
A key reason for the crash in altcoins like Cardano, IOTA, and Jasmy is that Bitcoin has formed a double-top pattern at $108,330. A double-top is one of the top bearish patterns in the market, and often leads to more declines.
Bitcoin has now dropped below the neckline at $89,223, suggesting more downside in the coming months. A big drop will indicate more declines to the key support at $73,750, the lowest point in March last year.
Altcoins are often driven by Bitcoin’s price action. In most cases, many of these altcoins decline when Bitcoin is in a steep downward trend and rise when it is soaring.
Crypto Crash: “Buy the Rumor, Sell the News”
A key reason Bitcoin and other altcoins like Cardano, IOTA, and Pi Network crashed is “buy the rumor, sell the news.” Most of these tokens rose last week after Trump announced crypto reserves and held the inaugural crypto summit.
With the crypto summit over, many of these altcoins are declining as investors sell the news. This refers to a situation where an asset rises ahead of a major event and then falls afterward. For example, most coins rose after Trump’s election and dropped after he was sworn in.
What Next for Altcoins Like Cardano, Jasmy, IOTA, and Pi Network?
These tokens may continue falling in the coming days as the fear and greed index falls and as concerns about a recession remain. However, on the positive side, the US dollar index and bond yields have crashed, signaling that the Federal Reserve will start cutting interest rates soon, which is a good catalyst.
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