Why is Crypto Falling? Bitcoin and Ethereum Leading Market Decline Amid Widespread Profit-Taking

The crypto market is experiencing significant downward pressure as Bitcoin and other major digital assets slide sharply lower. Bitcoin (BTC) has retreated to $68,230, representing a notable correction from its recent highs. This pullback isn’t an isolated incident—it reflects a broader market trend where investors are systematically locking in gains while macroeconomic headwinds intensify across traditional and digital asset classes alike. Understanding why crypto is falling requires examining multiple interconnected factors currently weighing on the market.

Profit-Taking Pressure from Long-Term Holders Driving the Decline

One of the primary catalysts behind crypto falling is the relentless wave of profit-taking activity sweeping through the market. Bitcoin experienced an extraordinary 117% rally during 2024, transforming skeptics into believers and early investors into substantial gainers. Now, those positioned for years are cashing out at historically attractive levels.

Data from Glassnode reveals that profit-taking currently exceeds $1.2 billion on a seven-day moving average—a staggering figure that captures the intensity of position closure among seasoned investors. While this falls short of the $4.0 billion peak recorded in mid-December 2024, it remains significantly elevated above historical norms. What’s particularly noteworthy is that the lion’s share of these profits is flowing from long-term holders who accumulated Bitcoin years ago, amplifying selling pressure across major cryptocurrency venues.

This phenomenon creates a self-reinforcing cycle: as long-term investors liquidate positions to realize gains, the selling pressure mounts, which in turn can trigger stop-loss orders and margin liquidations among other market participants. The result is the dramatic market decline we’re witnessing today.

Macroeconomic Headwinds Intensifying Broader Market Weakness

Beyond profit-taking mechanics, why is crypto falling also reflects deteriorating macroeconomic conditions that are constraining risk appetite broadly. The Chicago PMI—a critical indicator measuring manufacturing and services performance in the Chicago region—has flashed its lowest reading since May, signaling that an economic slowdown may be underway in the world’s largest economy.

Uncertainty surrounding the Federal Reserve’s interest-rate trajectory adds another layer of complexity. The central bank has communicated its intention to pause rate cuts until at least March 2025, creating policy ambiguity that weighs on speculative assets. Additionally, shifts in the political landscape heading into 2025 introduce further uncertainty into market calculations. When traditional markets show weakness, capital flows can quickly exit speculative positions like cryptocurrencies in search of safer havens.

Reflecting this broad risk-off sentiment, the S&P 500, Nasdaq, and Dow Jones have each declined more than 1%, indicating that crypto’s weakness is part of a wider equity market correction rather than a standalone crypto phenomenon.

Market Losses Spread Across Coins and Related Equities

The weakness in crypto is comprehensive and extends beyond Bitcoin. Ethereum (ETH) has declined to $2,050, while maintaining a 6.59% gain over the past 24 hours despite broader weakness. Solana (SOL) at $88.27 shows resilience with 7.04% gains intraday, though the broader digital asset complex has not been spared.

The CoinDesk 20 index—tracking the top 20 cryptocurrencies by market capitalization excluding stablecoins and exchange tokens—has slid 3.74%. Ripple (XRP) and Stellar (XLM) have absorbed the heaviest blows, down 6% and 6.3% respectively, while Litecoin (LTC) has proven more defensive at 1.9% lower, suggesting defensive positioning among traders.

The contagion effect extends into publicly traded cryptocurrency-adjacent companies. MicroStrategy (MSTR) and Coinbase (COIN) have tumbled 7% and 5.3% respectively, while Bitcoin mining powerhouses like Marathon Digital Holdings (MARA) and Riot Platforms (RIOT) have plummeted over 7%. These equity losses underscore how sentiment deterioration cascades from spot prices into leveraged positions and corporate valuations.

Expert Perspective: Consolidation and 2025 Outlook

Despite the turbulence, market analysts view the current pullback as a necessary market function rather than a catastrophic breakdown. Joe Carlasare, partner at Amundsen Davis, told CoinDesk: “The market exceeded expectations in 2024, but signs of exhaustion signaled the need for consolidation. Looking ahead to 2025, I’m optimistic but expect the path to diverge from consensus, as markets often do. Bitcoin’s adoption continues to grow, and I anticipate it will generally move in line with traditional markets. If the U.S. avoids a significant growth slowdown, Bitcoin should perform well, though the ride may be bumpier than in 2024.”

This assessment suggests that while crypto falling continues in the near term, the long-term structural case remains intact. The key variable becomes whether economic conditions stabilize or deteriorate further.

Technical Backdrop: Potential Support and Resistance Levels Ahead

From a technical perspective, the decline presents a setup where market participants are watching critical levels. Resistance around $72,000 and $78,000 for Bitcoin will be essential to monitor—sustained breakouts above these levels would signal a potential resumption of the uptrend that characterized much of 2024. Conversely, inability to sustain above support levels could trigger further deterioration in sentiment.

Some trading desks are already positioning for a rebound, with fund managers rotating into volatile altcoins and options strategies as they assess the durability of the current weakness. However, market observers like Joel Kruger at LMAX Group have urged caution, noting that any bounce may represent a technical rebound driven by oversold conditions and thin liquidity rather than fresh fundamental catalysts.

The combination of profit-taking, macroeconomic uncertainty, and technical pressure creates a complex backdrop for why crypto is currently falling. While the underlying adoption thesis remains intact, near-term consolidation appears likely as the market digests gains from 2024 and recalibrates to an environment of tighter monetary policy and economic moderation.