- The total cryptocurrency market capitalization shrank by roughly 10% today, which represents a more than $230 billion drop
- Growing uncertainty over inflation rates, new covid variant, and Kazakhstan’s BTC mining outage are the main culprits for the market pullback
- Close to $900 million worth of “longs” and “shorts” was liquidated in the last 24 hours
Bitcoin and other digital currencies have undergone a massive market pullback in the last 24 hours, which plunged virtually all coins in the red zone. The value of all digital assets in circulation has diminished by roughly 10%, leaving the total market cap standing at $2.09 trillion at press time.
A myriad of macroeconomic factors contributed to the market crash. The most notable were Fed preparing an interest rate hike, Kazakstan-based Bitcoin miners going offline, and new covid variant discovery in France.
Bitcoin drops to $42K, a price level not seen since September
Bitcoin has been trading in a relatively tight range in the first week of 2022. Earlier today, however, the price of the world’s largest crypto dropped below $46,000 and from then on continued on a quick downward slide towards $42,000. In the span of just 3 hours, Bitcoin lost 8% of its value and bottomed out at a four-month low of $42,500.
Ethereum and other altcoins were hit harder than BTC
Most digital currencies have performed even worse than BTC over the past 24 hours. Ethereum lost 11.7% of its value and is changing hands at $3,350 at the time of this writing. While Ethereum’s downswing wasn’t as sudden as Bitcoin’s, the second-largest crypto ultimately ended up shedding more value.
Apart from SafeMoon, 99 out of the top 100 largest cryptocurrencies by market capitalization are posting negative returns today. Severable notable double-digit losers include Polkadot (-13.3%), Avalanche (-12.5%), Solana (-12.7%), and Terra (-11.3%).
A wave of crypto liquidations wipes out nearly $900 million from futures markets
Derivatives traders are especially exposed to the high degree of market volatility. In total, $889 million worth of futures contracts has been liquidated in the last 24 hours, with approximately 90% share of them being long positions.
According to blockchain analytics firm Coinglass, the largest share of liquidations took place on the OKEx crypto exchange ($266M), followed by Binance ($247M) and FTX ($166M).
With economic uncertainty over growing inflation rates and concerns over the new covid variant looming in the air, the markets are most likely headed towards a period of high volatility and unpredictability.
David is a crypto enthusiast and an expert in personal finance. He has created numerous publications for different platforms. He loves to explore new things, and that’s how he discovered blockchain in the first place.