Simultaneous fall of cryptocurrencies: why are crypto assets falling synchronously?

When crypto drops in the market, it almost never happens in isolation. Bitcoin and Ether often move in unison, followed by altcoins. As of January 9, 2026, BTC is trading at $90.47K with a profit of +0.68%, while ETH is at $3.09K with a minimal gain of +0.16%, but this does not diminish the fact of synchronized asset interaction. Why does crypto fall simultaneously? The answer lies at the intersection of macroeconomics, investor psychology, and technical market interconnectedness.

How macroeconomics drives market movements

Major economic decisions have a cascading effect on the entire digital asset ecosystem. When central banks announce unexpected changes in interest rate policies, it is immediately reflected in quotes. History has shown this clearly: in 2023, the Fed’s decision to raise interest rates led to both Bitcoin and Ether crashing approximately 15% over a few days. Smaller projects fell even more — due to low liquidity and investors rushing to exit risky assets.

A similar situation occurred in 2025 with the emergence of quantum-resistant blockchain technologies. Concerns that existing crypto systems could become vulnerable triggered a mass sell-off. Although the threat was more theoretical than real, market sentiment determined the actual outcome — a synchronized decline of nearly all cryptocurrencies.

Network effect and altcoin dependency

Why does crypto fall together? Because small cryptocurrencies are economically tied to market leaders. When Bitcoin loses 10%, a wave of panic prompts investors to pay attention to the entire market. Portfolios consisting of mixed assets begin to sell off indiscriminately. Data shows that the correlation coefficient between BTC and ETH in 2025 remained above 0.89 — meaning the movements of one usually predict the dynamics of the other.

Moreover, during major downturns, the total market capitalization of all cryptocurrencies drops by 20-30% simultaneously. This is not coincidence — it is a structural property of the market. When panic rules, there are no boundaries between assets.

The role of volatility and crowd psychology

The cryptocurrency volatility index (CVIX) shows jumps of more than 40 points on days of major economic news or technological shocks. This reflects the market’s reactivity to external stimuli. Investors, seeing red candles, start looking for an exit, and each wave of selling amplifies the previous one. Crowd psychology turns rational declines into panicked sell-offs.

What this means for market participants

Understanding the synchronicity of crypto declines is critical for risk management. Traders and investors should monitor global economic indicators, regulatory decisions, and technological developments in the industry. High correlation between major assets means that diversification within crypto has limited effect — during a crisis, everything falls together.

The key skill is foresight. Monitoring the Fed, geopolitical events, and technological announcements can provide a few days’ lead time for positioning before a general revaluation. Additionally, understanding investor behavior patterns in response to different types of news helps to adapt more quickly to market shifts.

Final conclusions

Why does crypto fall synchronously? It’s a question of interconnectedness. Bitcoin and Ether set the direction, altcoins follow by inertia. External macroeconomic factors, regulatory changes, and technological shifts shape the overall market sentiment. Investors who understand these mechanisms are better prepared for volatility and can make more informed decisions about entering and exiting positions in this highly uncertain market.