Why is crypto crashing?

Crypto is supposedly the currency of the future, but it is not doing so well presently. The sector has lost more than $1 trillion in value over the last few weeks.

The crypto industry is having a “terrible, horrible, no good, very bad month,” said USA Today. Bitcoin has lost more than 10% of its value for the year, dropping from a high of $126,000 in October to under $90,000 last week. The drop in digital currency values is due to a “whirlwind of factors” that include shaky showings for artificial intelligence and technology stocks amid growing concerns about the overall economy. “No one can say” when the dust might settle.

“It was supposed to be crypto’s year,” said The Wall Street Journal. Since 2025 brought a “crypto-loving White House, Wall Street adoption and friendly legislation,” it seemed poised to erase the industry’s regulatory obstacles. Instead, the “sky-high expectations of a golden age” have foundered. Cryptocurrency’s original reputation was as an “antiestablishment asset” coming out of the Great Recession. Now the sector is trying to “go legit” but having trouble shedding its standing as the “deranged, foul-mouthed little sibling of Wall Street.”

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What did the commentators say?

“Brutal” selloffs in the crypto sector happen “every few years, or whenever sentiment snaps,” said Emily Nicolle at Bloomberg. But those previous cycles did not match the “speed and scale” of crypto’s collapse in recent weeks. The difference this time is that crypto is now “woven into the fabric of Wall Street and the broader public markets.” That means its fate is now “tied to AI-fueled market optimism.” Amid growing fears of an AI bubble, though, it does not take much prompting to “spook investors into selling.”

Crypto in recent years has gone from an “object of mockery” to “broadly accepted, even encouraged” by mainstream financial institutions, said The Economist. That victory actually poses a problem. The “wider acceptance” has deepened crypto’s links to the broader financial markets, so that the “pain from a crypto crash will be felt more widely than in the past.” A government intervention seems remote, but “surprises can never be ruled out” in politics and in crypto.

What next?

Crypto believers see it as a “safe store of value against inflation and rising national debt,” said Marketplace. But the current instability comes amid “sticky inflation and a rising national debt.” The sector’s growing acceptance on Wall Street means your 401(k) probably includes some crypto stock. If the downturn lasts, that would produce “some knock-on effects on spending” in the broader economy, said Columbia Law School lecturer Todd Baker to the outlet.

There are now some fears of a “crypto winter,” said MarketWatch. But other observers say the sector is likely still in solid shape for the long term, thanks to its integration with financial markets. Banks like J.P. Morgan now accept crypto assets as collateral. We are not seeing a crypto winter, said Frontier Investments CEO Louis LaValle. “I think we’re watching bitcoin grow up.”