Crypto crash today: why are altcoins like Uniswap, WLFI, Pepe Coin going down?

A crypto crash that has cost investors billions of dollars is unfolding, impacting popular names like Uniswap, World Liberty Financial (WLFI), and Pepe (PEPE). These assets have seen double-digit losses from their highest levels this year. Specifically:

• Uniswap price has fallen by 21% from its highest level this week.
• WLFI has dropped by 15% from this week’s high.
• Pepe Coin has plunged by about 65% from its peak this year.

Even Bitcoin's price has experienced a significant downturn, nearing $100,000 (latest approximations).

The primary driver of the crypto crash is fear in the market. The closely-watched Crypto Fear and Greed Index has dropped to 25, signaling that the market may soon enter the extreme fear zone:

• This index gauges sentiment in the crypto sector by analyzing factors such as price movements, social media activity, derivatives market performance, and market composition.
• It is inspired by a similar index created by CNN Money that captures stock market trends.

This fear is compounded by major liquidation events, including a recent incident where 1.6 million investors were wiped out, leading to the evaporation of more than $20 billion in a single day. Additionally:

• Attempts to rebound are facing substantial resistance, adding to market uncertainty.
• Fear and Greed Index for stocks has also moved to the fear zone, standing at 34.

The ongoing retreat in open interest has further exacerbated the market crash. According to data from CoinGlass, crypto futures open interest has dropped by 0.6% in the last 24 hours, amounting to $141 billion, a sharp decline from the $225 billion recorded before the October liquidation event.

Specific examples include:

• Uniswap: Open interest fell from $782 million earlier this week to $575 million.
• Pepe: Open interest dropped from an all-time high of $1.02 billion to $198 million.
• WLFI: Open interest tumbled from over $1 billion to $270 million.

The crash is also linked to a decline in institutional interest in cryptocurrencies, particularly in areas like DAT (Digital Asset Treasury) and ETFs:

• Bitcoin ETFs have experienced $1 billion in outflows last week, reducing the cumulative figure to $60.2 billion.
• Ethereum ETFs lost over $2 billion in assets in recent months.
• Demand from DAT companies such as Strategy, Metaplanet, Trump Media, and Tron Inc. has also plummeted.

This drop in institutional involvement is contributing to reduced market stability and confidence.

Despite the current downturn, there are potential drivers that may reignite growth in the crypto market:

1. The SEC has started approving spot altcoin ETFs, some of which are already witnessing strong demand. This process could accelerate further now that the government shutdown has ended.
2. The Federal Reserve is expected to continue cutting interest rates this year, a move likely to benefit the crypto industry.

These developments may provide much-needed relief and pave the way for a recovery in the coming months.