The Federal Reserve's aggressive rate hikes since early 2025 to combat inflation above 4% primarily drove the crypto market crash. Tightening monetary policy reduced risk appetite and triggered liquidations exceeding $3.2 billion in a single day, severely impacting Bitcoin and Ethereum.

Medium confidenceStructural

CURRENT STATE

This tightening led to a sustained decline in crypto valuations, with Bitcoin down approximately 48% from its October peak of $126,272 and Ethereum falling over 60%. Investor sentiment remains risk-averse amid hawkish Fed commentary and geopolitical tensions, causing sell-offs and ETF outflows exceeding $1 billion.

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