According to one analyst, a big sell-off has spread like wildfire over the whole cryptocurrency market, evoking memories of the bank runs that shook investors during the 2008 financial crisis.
Estimates from the price-monitoring website CoinMarketCap show the sell-off erased more than $200 billion worth of market capital in just 24 hours.
Bitcoin dipped below $26,000 for the first time in 16 months, as a result of a broader cryptocurrency sell-off. As per Coin Metrics charts, BTC fell to a low of $25,40 on Thursday night. This is the first time since December 26, 2020 that the cryptocurrency has fallen below the $27,000 threshold.
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BTC dropped a third of its value, or $13,000, in more more than eight sessions and is down more than 45 percent so far this year. It has lost nearly two-thirds of its value since reaching a high of $69,000 in November 2021.
The price of Ether, the second-largest digital currency, plummeted to $1,704.05 per token. It is the first time since June 2021 that the token has dipped below $2,000. Ether was recently priced at $1,937.88, a decrease of 8.8 percent.
Scottie Siu, investment director of Axion Global Asset Management, a Hong Kong-based firm that operates a crypto index fund, stated, “I do not believe the worst is gone.”
“I believe there will be more negative outcomes in the following days. I believe the market will stabilize if open interest plummets significantly, removing speculators from the equation,” Siu said.
In a Reuters report, citing statistics from CoinMarketCap, the market value of all cryptocurrencies has fallen to $1.12 trillion, nearly a third of where it was in November, with more than 35 percent of the drop occurring this week.
Crypto total market cap at $1.28 trillion on the daily chart | Source: TradingView.com
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The rout showed signs of spreading further Thursday as crypto-related stocks in Asia also nosedived.
The stock price of the Hong Kong-listed fintech company BC Technology Group fell by 6.6%. The Japan-based Monex Group, which operates the TradeStation and Coincheck platforms, finished the trading day 10 percent lower.
In the meantime, investors are abandoning cryptocurrencies at a time when stock markets have plummeted since the peak of the coronavirus pandemic in the face of paranoia of rising prices and a worsening economic outlook.
Wednesday’s release of U.S. inflation data revealed that prices for goods and services increased by 8.3 percent in April, above analysts’ expectations and approaching the highest level in nearly four decades.
Featured image from Reddit, chart from TradingView.com