What's behind the decline in cryptocurrency: Complex factors putting pressure on market sentiment

The recent cryptocurrency market has entered a difficult phase for many investors. Multiple factors are overlapping, increasing downward pressure across the entire market, and today’s sentiment remains broadly negative. The decline is driven by a combination of geopolitical risks, large-scale position liquidations, and waning investor confidence.

Pessimistic Signals from the Overall Market

Data from the past 24 hours clearly reflect the serious situation. The total market capitalization of cryptocurrencies has experienced a significant drop, indicating rising global selling pressure. The fear and greed index remains low, suggesting investors are concerned about the broader economy.

Trading volume has clearly increased, with a noticeable surge in sell-offs within the market. This spike in trading activity is evidence of panic selling spreading. As many short-term traders exit their positions, market liquidity is becoming even more fragile.

Bitcoin and Altcoin Selling Pressure

Bitcoin’s price has fallen 0.64% over the last 24 hours, currently trading at $70.36K. Bitcoin’s dominance in the market remains at 55.60%, indicating its price movements continue to have a strong influence on the overall cryptocurrency market.

The altcoin market is even more strained. Ethereum has declined 0.35%, Solana is down 1.33%, and XRP has dropped 1.25%. The widespread decline of these major assets suggests the entire market is under systemic downward pressure, not just isolated factors.

Geopolitical Risks Erode Market Sentiment

Recent political uncertainties are having a serious impact on the crypto market. Notably, policy announcements regarding import tariffs have dramatically increased global economic uncertainty. Until this policy turmoil subsides, the market is likely to maintain a risk-averse stance.

Large-scale position liquidations are also accelerating the decline. Over $900 million worth of positions have been liquidated in the past 24 hours, triggering a chain reaction of stop-losses. Investors are concerned about potential ripple effects across financial markets, which is fueling further capital outflows from cryptocurrencies.

Clear Divergence Between Gainers and Losers

Even amid a broadly bearish market, some individual assets are performing differently. PAXG (gold-backed tokens) have risen 1.10%, reflecting increased demand for physical assets. Some tokens have gained as much as 1.62%, indicating ongoing capital shifts between sectors.

Conversely, certain assets are leading the decline. SUI has fallen 0.17%, DEXE is down 6.44%, and IP tokens have declined 1.71%, highlighting areas where risk asset sell-offs are particularly intense. The market is also becoming more selective, with some tokens experiencing sharper declines.

Structural Factors Behind Cryptocurrency Declines

Understanding today’s crypto downturn requires recognizing the chain reaction of multiple factors. Political uncertainty → economic anxiety → risk asset sell-offs → large liquidations → psychological panic, creating a negative spiral.

Investor sentiment deterioration is not just based on past data but also reflects anticipatory responses to ongoing uncertainties. Market participants are factoring in potential future risks, which is contributing to the current downward pressure.

The future trajectory of the cryptocurrency market depends heavily on geopolitical stabilization and investor confidence recovery. While short-term downward pressure is likely to persist, more investors are viewing this as a correction phase until a new equilibrium is reached.