Why is the crypto market crashing today on 14 Oct?

The overall crypto market cap has fallen by 4% in the past day, with major tokens like Bitcoin, Ethereum, and XRP dropping simultaneously. Why is the market crashing?

On Oct. 14, crypto market experienced a major decline, with its overall market cap dropping below $4 trillion to just $3.8 trillion. The market has lost about 4% of its value following a series of major token price declines and forced liquidations.

So far, the crypto market has lost about $25 billion in value, with forced liquidations reaching more than $371.7 million in just 24 hours. This past week, the crypto market has been on a downturn, having seen $16.7 billion in forced liquidations on Oct. 10.

Bitcoin (BTC) has dropped by more than 3% in the past 24 hours, dropping from its previous daily peak at $115,934. The token is currently trading hands at $111,410. BTC remains below the 30-day period moving average, confirming sustained bearish momentum.

Bitcoin’s Relative Strength Index shows a similar pattern. It dipped deeply into oversold territory earlier in the session and has since rebounded to around 70, approaching the overbought zone. This indicates that buying pressure has returned in the short term, which means BTC could drop lower unless it makes a comeback.

Similar to Bitcoin, Ethereum (ETH) has fallen by 3.32%. ETH has dropped below $4,000, and it has currently stabilized around the $3,970 level. It has continued its week-long decline of around 15.39%.

Despite the decline, ETH has managed to remain above its 30-day moving average at $3,968, hinting at a potential short-term recovery after a bearish period. The RSI, which stands at 61, suggests moderate bullish momentum following a rebound from oversold conditions.

Additionally, the crypto greed and fear index has dropped from about 64 at the end of last week to a new low in the past six months, falling to as much as 27 just this weekend. Today, the index has stabilized at 39, still within the fear zone.

What is fueling the crypto market crash?

The decline in crypto markets today can be attributed to macro and geopolitical shocks. On Oct. 14, Channel News Asia reported that China has responded to U.S. trade pressure by rolling out countermeasures, including sanctions and investigations tied to shipping and export controls. This indicates tensions heating up between U.S. and China, with signs pointing to a potential trading war.

Not only that, the crypto market is also still recovering from a historic $19 billion liquidation event over the weekend, which wiped out leveraged positions across many major cryptos and sparked cascade sell pressure.

Moreover, the crypto market crash comes just a few hours ahead of the keynote speech that is set to be delivered by Federal Reserve Chair Jerome Powell. The Fed chair is going to discuss the economic outlook and monetary policy at the National Association for Business Economics annual meeting in Philadelphia on Oct. 14 at 12.20 pm local time.

With Powell’s speech looming, traders are trimming exposure and increasing hedges ahead of possible hawkish remarks that could imply delayed rate cuts or tighter liquidity. Whales have been shorting positions on altcoins such as DOGE (DOGE), PEPE (PEPE), XRP (XRP), and ASTER (ASTER), among others, indicating a mass effort to hedge against the potential fall that could occur.