A crypto crash is a sudden and significant decline in the prices of cryptocurrencies across the market. It often happens within a short period, wiping out billions of dollars in market value and causing widespread panic among investors and traders. During a crash, major cryptocurrencies such as Bitcoin and Ethereum can lose a large percentage of their value in hours or days, triggering heavy selling pressure.

Crypto crashes can be caused by various factors. Negative regulatory announcements, security breaches, exchange collapses, macroeconomic instability, or shifts in investor sentiment can all spark rapid declines. Because the crypto market operates 24/7 and is highly speculative, price movements tend to be more volatile than traditional financial markets. Panic selling and liquidations from leveraged positions often accelerate the downward trend.

Market psychology plays a major role. When fear spreads, investors rush to sell in order to limit losses, which pushes prices even lower. Social media and news cycles can intensify this reaction.

Although crashes can result in severe short-term losses, they are also considered a natural part of the crypto market cycle. Historically, the market has experienced multiple crashes followed by periods of recovery and growth. For long-term investors, crashes may present buying opportunities, while for short-term traders, they highlight the importance of risk management and capital protection strategies.