According to one analyst, a major sell-off has spread like wildfire across the cryptocurrency market, reviving memories of the bank runs that rocked investors during the 2008 financial crisis.
Estimates by website CoinMarketCap show that the sell-off wiped out more than $200 billion in market capital in just 24 hours. Bitcoin has fallen below $26,000 for the first time in 16 months on a broader cryptocurrency sell-off. According to Coin Metrics charts, BTC fell to a low of $25,400 on Thursday night. This is the first time since December 26, 2020 that the cryptocurrency has fallen below the $27,000 threshold.
Major cryptocurrencies under pressure
BTC has lost a third of its value, or $13,000, in 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 hitting a high of $69,000 in November 2021.
The price of Ether, the second largest digital currency, has fallen to $1,704.05 per token. It is the first time since June 2021 that the token has dipped below $2,000.
Scottie Siu, investment director at Axion Global Asset Management, a Hong Kong-based firm that operates a crypto index fund, stated, "I don't think the worst is over."
“I believe there will be more negative results over the next few days. I believe the market will stabilize when open interest falls significantly and speculators are removed from the equation,” Siu said.
According to a Reuters report, citing statistics from CoinMarketCap, the market value of all cryptocurrencies has fallen to $1.12 trillion, nearly a third of November's value, with more than 35 percent of the drop occurring this week.
Investors are letting cryptocurrencies down?
There were signs the slide may continue on Thursday as crypto stocks in Asia also plummeted. Hong Kong-listed fintech BC Technology Group's share price fell 6.6%. Japan-based Monex Group, which operates the TradeStation and Coincheck platforms, ended the trading day down 10 percent.
Meanwhile, investors are exiting cryptocurrencies at a time when stock markets have plummeted since the peak of the coronavirus pandemic amid paranoia over soaring prices and a deteriorating economic outlook.
US inflation data released on Wednesday showed that prices for goods and services rose 8.3 percent in April, beating analysts' expectations and nearing the highest level in nearly four decades.
Nevertheless, most cryptocurrencies have recovered today and are mostly posting gains of over ten percent. It remains to be seen whether the market can sustain this upswing in the next few days, but traders and analysts remain bearish on the short-term performance of Bitcoin & Co.
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