Cryptocurrencies experienced a sharp drop of nearly 10% in just a few hours, causing the entire market to turn red. Many digital currencies lost more than 20% of their value, signaling a bear market for cryptocurrencies – defined by price drops of 20% or more.
The largest cryptocurrency by market capitalization, Bitcoin, plummeted to around $57,000 USD, losing over 20% of its value compared to its all-time high of $73,000 in mid-March. Analysts attribute the selling pressure in the market to lack of attention towards spot ETFs in Hong Kong and investor concerns about interest rates.
During the same period, other cryptocurrencies like Ethereum (ETH) and Solana (SOL) witnessed 9-11% declines. Currencies with several hundred million USD in market capitalization lost between 15-25% in just a matter of hours. Futures trading positions worth nearly $100 million were liquidated on exchanges in the past hour, totaling close to $500 million in liquidations over a 24-hour period. The liquidation occurs when the loss of trading orders surpasses the initial deposit amount due to the use of large-scale leverage in futures contract trading.
The decline in cryptocurrencies is in sync with traditional markets as the Nasdaq index fell 2% and the S&P 500 lost 1.6% on the same day. Experts attribute the downward trend in cryptocurrency markets to expectations for higher interest rates by the US Federal Reserve due to persistent inflation, which is also leading to a stronger position for the USD.
With today’s sharp decline, both Bitcoin and the overall cryptocurrency market are on track for their worst monthly decline since November 2022. In April alone, Bitcoin lost nearly 18% of its value, while Ethereum dropped around 19%. Altcoins, such as SOL, Dogecoin (Doge), and AVAX, are facing even deeper corrections of 35-40% this month. The total cryptocurrency market capitalization has decreased by almost 20% since its peak in March