Here’s why the crypto market is going down today

The crypto market is going down today, with Bitcoin falling by 1.25% in the last 24 hours, and XRP, Solana, Dogecoin, and Hyperliquid (HYPE) falling by over 3%. The market capitalization of all tokens dropped by 1.36% to $3.15 trillion. Here are some of the reasons why the crypto market crash is happening today.

Crypto market is going down as investors sell the news 

One key reason why the crypto market is going down is that there was some important news that pushed it higher. Wl

The most important news was that Vanguard, a top company with over 11 trillion in assets and 50 million customers, will start off offering crypto ETFs, a major change for the company. It has already started offering some of these funds.

The other notable news was that Donald Trump hinted that he would nominate Kevin Hassett to be the next Federal Reserve Chair, replacing Jerome Powell. 

Hassett is viewed positively by crypto traders because he used to serve as a Coinbase advisor. He also favors low interest rates and is more aligned with Donald Trump on key issues.

Meanwhile, the Securities and Exchange Commission (SEC) approved the spot Chainlink ETF, which has attracted millions of dollars in inflows in the past few days.

Additionally, Charles Schwab announced that it would start offering crypto trading services on its platform in January, a notable thing for a company with over $12 trillion in assets. 

All these news events helped to push crypto prices higher this week. Whenever this happens, traders often sell the news as they wait for an additional catalyst.

Futures activity is falling 

The other main reason why the crypto market is going down is that activity in the futures market has started to deteriorate in the past few days.

One way to look at this is the futures open interest, which is an important metric that looks at open positions in the futures market. These positions can be with call or put options.

Data compiled by CoinGlass shows that the futures open interest has dropped by 1.87% to $132 billion. Similarly, the 24-hour liquidations dropped by 27% to $267 million.

Therefore, the falling open interest means that investors have reduced their leverage, which means that demand has waned in the past few days.

Fear and Greed Index is in the fear zone 

Meanwhile, there is a sense of fear in the market despite the recent recovery in the industry. Data shows that the closely-watched Fear and Greed Index has remained in the fear zone this week.

The index has moved from last month's extreme fear zone of 8 to the fear area of 25. In most cases, crypto prices tend to underperform when there is fear in the market and then continue rising when it moves to the greed zone.

Federal Reserve interest rate decision anticipation

The other main reason why the crypto market is going down is that investors are now anticipating the final interest rate decision of the year.

Economists expect that the bank will cut interest rates by 0.25% in this meeting now that the labor market is showing cracks. 

What is unclear is on the guidance of what to expect in the next meetings. It is common for top financial assets to remain in a tight range or pull back ahead of the Fed decision. This also explains why the top stock market indices like the Dow Jones and S&P 500 remained under pressure this week.