The crypto market saw its market cap drop 19%, falling below $2 trillion for the first time in two months. The massive sell-off was triggered by Bitcoin’s price correction, which is believed to be related to recent news in the media.
The state of the market
At the time of writing, Bitcoin was down 25% in the last 24 hours and 41% from last month’s all-time high. This massive correction resulted in $3.8 billion in leveraged positions liquidated globally.
Aside from Bitcoin, Ethereum was another major cryptocurrency that wiped off most of its gains from last month with a 27% decline over the past 24 hours. Other altcoins were hit harder and are down between 30% to 60%.
What has likely caused the correction?
News of the Chinese Central Bank banning financial firms from any form of crypto trading is seen as a catalyst for the recent sell-off.
Even before this news, there were already some negative factors affecting bitcoin’s price performance. For instance, Elon Musk posted comments on Twitter about bitcoin’s sustainability. In addition, countries like Turkey and India are looking into regulating cryptocurrencies.
More importantly, the amount of leveraged positions being liquidated also plays a big role in the speed of the market going downwards.
Is this the end of the bull market?
Today’s correction is the largest we’ve seen in the current bull market. However, some analysts point out that there have also been corrections of up to 40% during the 2017 bull market. They also point to the growing acceptance of crypto despite the recent market chaos.