The collapse of bitcoin was followed by the fall of the entire market, and today we will try to consider and analyze the reasons that led to this: How is this related to the ban of cryptocurrency in China? How Elon Musk influenced the situation and more
And then, BTC crashed to almost USD 30,000, before recovering. At 13:48 UTC, BTC trades at USD 35,079 and is down by 22% in a day. Other coins from the top 10 list are down 27%-40%.
Total liquidations in the crypto derivatives market surpassed USD 6.56bn in the past four hours and USD 8.42 in the past 24 hours (757,366 positions in total), per Bybt.com data.
Earlier today, BTC dropped below USD 40,000 for the first time since February, and Crypto analytics firm Coin Metrics found it “inevitable” even before this happened. While BTC veterans appear to be “weathering the storm and continuing to hold for the long-term,” given the major upgrades coming this year, the analysts at Coin Metrics gave two reasons for the current drop.
First is Elon Musk’s changing positions on BTC and him moving back to dogecoin (DOGE), combined with Tesla removing BTC as a payment option, and their reason exasperating the Bitcoin energy consumption debate.
The second is the cyclical nature of crypto markets. “Despite the knee-jerk reaction to Musk’s Tweets, BTC’s recent downturn appears to be part of a larger trend. Crypto markets tend to be cyclical and move from periods of BTC domination to periods where smaller-cap assets reign supreme.”
And currently, we seem to be in an altcoin cycle, a big part of which is ethereum (ETH)’s surge and it outperforming BTC. Also, what the cycle led is the rise of “Ethereum competitors”, including ethereum classic (ETC), which resulted in BTC’s dominance dropping, as well as trading volume for smaller-cap assets surging, writes Cryptonews.
Commenters online reiterated what had been reported earlier – that people seem to be rotating out of BTC into ETH.
Also, one more reason for the drop is once again repeating crypto ban FUD from China.
“This is the latest chapter of China tightening the noose around crypto,” Antoni Trenchev, Co-founder of crypto lender Nexo, told Bloomberg TV. Many say that the price recovery will be slow, that a bear is imminent short-term, but that we’re in for a bull run after that.
Following China’s move and other developments, “Bitcoin investors are now in a state of fear, a situation that may influence further price drops,” Greg Waisman, co-founder of payment network Mercuryo, told Cryptonews.com. “Bitcoin’s recovery is, however, dependent on the coordinated effort by both retail and institutional investors to defy the market trend and load up on the coin. This recovery can occur at anytime as resistance is bound at this time.”
Waisman said that this drop is significant for the crypto space as most altcoins respond in tandem with the BTC price movement. “A continued fall without cushion may signal a broader entry into a bear market,” he added.
We remind you that Bitcoin fell by $ 4 thousand in half an hour. During the day, the quotes of the main cryptocurrency fell by 16%, and its capitalization fell to $ 716 billion.