In a jaw-dropping turn of events, the cryptocurrency market witnessed a staggering downturn, sending shockwaves through the financial world. Bitcoin (BTC), the poster child of digital assets, plummeted below $25,500, marking a nearly 12% decline within a 24-hour period.
Ethereum and several other major cryptocurrencies followed suit, descending into the same downward spiral. This unexpected movement has left investors and enthusiasts alike grappling with an air of uncertainty. Now, let’s delve into the factors that paved the way for this significant crypto crash.
What are the Root Causes?
China’s Evergrande Group, a prominent property developer, caused turmoil as it unexpectedly filed for bankruptcy in New York. This surprising move sent shockwaves through both the crypto and traditional financial sectors, disrupting market stability.
Reports surfaced, adding to the chaos, that Elon Musk’s SpaceX had drastically reduced its holdings in Bitcoin by a staggering $373 million. This development potentially indicates further instability and uncertainty in the market.
Read More: Max Keiser Turns Bearish on Bitcoin as BTC Price Nears 2-Month Low
Regulations are Still Not in Place
The regulatory landscape became a significant player in the crypto saga, introducing complexity to the crash. Despite investor demands and BlackRock’s application for a crypto exchange-traded fund (ETF), the elusive U.S. Securities and Exchange Commission (SEC) remained hesitant in granting approval for a Bitcoin ETF.
Meanwhile, Ripple’s XRP faced a legal setback as a U.S. judge allowed the SEC to challenge a previously favorable ruling for Ripple Labs.
Frenzied Liquidations
As cryptocurrencies plunged, a frenzied wave of liquidations ensued, putting over-leveraged positions in jeopardy. In the span of a mere hour, a whopping $801 million worth of assets were liquidated, underscoring the volatility of the market.
Meanwhile, the broader financial landscape also influenced the crypto market’s turmoil, concerns over the potential devaluation of the Chinese Yuan loomed large, echoing historical patterns of impact on Bitcoin prices. The crypto market’s total value dropped by 5.69% in just 24 hours, inching closer to the $1 trillion mark.
Related: Crypto Market Bloodbath: Bitcoin and Ether’s Price Slide Triggers $1B in Liquidations
Uncertainty Prevails
As the dust settles, it becomes evident that the cryptocurrency market has been plunged into a state of uncertainty. The intricate interplay of various factors behind this significant crash portrays a realm where volatility reigns supreme.
Read More: Why Did the Crypto Market Crash Today? Here Are the Top Reasons