Why Crypto Market Is Down Today and Is Recovery Ahead? 3 Top Reasons

The crypto market is down today, July 1, 2025, showing a dip of nearly 2% in total market cap, which now stands at $3.26 trillion, according to CoinMarketCap. Surprisingly, the 24-hour trading volume has jumped over 7% to $103.76 billion—a sign of panic selling, liquidations, or aggressive dip-buying.

So, why crypto market is falling now? Let’s break down the 3 major reasons shaking the market right now.

1. Bitcoin Liquidation Hits $5.21M: Bulls Wiped Out

Bitcoin is leading the decline, now trading at $106,025, down 1.58% in the last 24 hours. The biggest hit came from leveraged traders, as per Coinglass data .

• BTC Long Liquidations: $5.08 million

• BTC Short Liquidations: Just $128K

This Bitcoin liquidation map clearly shows bulls were heavily over-leveraged. When the price dropped suddenly, their positions were auto-liquidated—fueling a cascading sell-off.

2. Trump vs. Elon Musk Political War Sparks Uncertainty

Political chaos is shaking industry confidence. The U.S. Senate is preparing to vote on Trump’s controversial $4.5 trillion “One Big Beautiful Bill”, which includes massive tax cuts and military funding—but at the cost of increasing national debt by over $3 trillion.

Elon Musk blasted the bill and warned every Congressman who supported it will be unseated. This high-voltage Trump Elon Musk fight is creating market-wide uncertainty , which is one reason why cryptocurrency is down today—investors are risk-averse in political storms.

3. Backed Finance Founders’ DAOstack Link Shakes Web3 Trust

A new concern hitting the crypto market crash comes from Backed Finance, the team behind tokenized stock platform xStocks. All three founders were previously part of DAOstack, a Web3 project that raised $30M but collapsed in 2022. As xStocks deals in blockchain-based Real World Assets (RWAs), this past link has sparked fears of mismanagement. The news has rattled confidence in RWA and DeFi sectors—adding to the reasons behind today's crash.

Sentiment Check: Fear or Opportunity?

Strangely, the Fear & Greed Index is still at 64 (Greed). Even with today’s drop, sentiment still looks favorable. As per my experience being a cryptocurrency analyst, many traders see this time as a typical buy-the-dip rather than further trouble.

Source: Crypto Fear and Greed Index

Final Thoughts: Is This Just a Temporary Dip?

To conclude, the reasons why the crypto market is down today are a more complex issue:

1. Bitcoin price decrease , all due to significant long liquidations

2. Chaotic politics with Trump’s bill and Musk’s tweets

3. Public trust is impacted by new tokenization projects

Either way, traders should pay attention to climbing trading volume and a greedy sentiment index, signaling that the situation may reverse soon.

Also, Long term investors should continue to pay attention to major directions of movement through trusted sources, along with comprehensive crypto news today associated with potential good entry points in the industry.