Story Highlights Gold and silver hitting record highs drained liquidity from crypto, triggering widespread market corrections. Bitcoin’s profit-taking wave and ETF outflows sparked a chain reaction across major cryptocurrencies globally. Rising inflation fears and Fed policy uncertainty add pressure, slowing risk appetite in digital assets. The crypto market experienced a sharp downturn over the past 48 hours, erasing nearly $600 million in leveraged positions and pushing total market capitalization down by about 1% to $4.14 trillion. Major coins like Bitcoin, Ethereum, and especially altcoins have seen significant declines, prompting traders to ask what’s driving today’s dip. Key Reasons Behind the Drop Gold and Silver Take the Spotlight A key reason behind the recent crypto drop is the sharp rise in gold and silver, both of which have surged to new all-time highs. Gold’s total market value has now crossed $27 trillion, adding nearly $6 trillion in just a few months, while silver’s market cap stands near $2.7 trillion. When these traditional “safe-haven” assets rally so strongly, it usually signals something deeper, and often pulls money away from riskier assets like crypto. Profit-Taking by Investors Another reason is the profit-taking by investors. After Bitcoin’s strong rally toward a new all-time high, many holders chose to sell and secure their profits, leading to more selling pressure in the market. Yesterday, Bitcoin ETFs also recorded notable outflows, Grayscale saw $45.5 million leave its fund, while Fidelity and ARK reported outflows of $13.2 million and $5.6 million, respectively. Massive Liquidations and Changing Sentiment A big wave of liquidations has added more pressure. Over $600 million worth of leveraged positions were wiped out in a single day, mostly from long traders who bet on higher prices. As Bitcoin failed to stay above its record high of $126,000, confidence dipped. The overall market mood has shifted from “greed” to “neutral”, with traders turning more cautious about further declines. Uncertainty Around the Fed and Economy Lastly, the unclear signals from the Federal Reserve are also weighing on sentiment. Investors are waiting for new comments from Fed Chair Jerome Powell and upcoming economic data to get a clearer view on interest rate cuts. Adding to the cautious mood, the U.S. government shutdown has left markets uneasy, while inflation expectations are climbing again.