The recent decline in the cryptocurrency market is mainly driven by concerns that the U.S. Federal Reserve may not cut interest rates as many times as previously expected. Fed officials have signaled caution on inflation and maintained a tight labor market, which sustains higher interest rates and dampens risk appetite. This has shaken investor confidence in crypto, leading to more sell-offs and a drop in the Crypto Fear and Greed Index, reflecting increasing fear and negative sentiment in the market. Additionally, the market is experiencing heavy liquidations, where leveraged long positions are being forcibly closed. Liquidations reached over $1.6 billion earlier this week, intensifying the downward pressure on prices. Major cryptocurrencies like Bitcoin fell below $110,000, and altcoins such as Avalanche, Aster, and Dogecoin have dropped over 10%. This liquidation cycle causes traders to stay on the sidelines, further reducing market liquidity and driving prices down. Overall, this downturn is seen as a correction following recent gains rather than the start of a prolonged bear market. Some experts believe such shakeouts can be healthy for long-term growth, though the immediate environment remains bearish due to Fed policy outlook and reduced market liquidity.