The cryptocurrency market experienced a significant downturn, with Bitcoin experiencing a nearly 10% drop in value in just a few hours. This has led to concerns among investors and pushed cryptocurrencies into bear market territory, defined as price drops of 20% or more.
The largest cryptocurrency by market capitalization, Bitcoin, saw its value drop from around $73,000 to $57,000 in mid-March, marking a decrease of over 20%. Analysts attribute the selling pressure in the cryptocurrency market to the lack of attention on spot ETFs in Hong Kong and investor concerns about interest rates.
Other cryptocurrencies like Ethereum (ETH) and Solana (SOL) recorded losses of 9-11%, while currencies with capitalizations in the hundreds of millions experienced drops of 15-25%. Futures trading positions worth nearly $100 million on exchanges were liquidated in just one hour, totaling almost $500 million in liquidations over a 24-hour period. This was due to the high leverage allowed in futures contract trading, where liquidation occurs when trading losses exceed the initial deposit amount.
The dismal performance of cryptocurrencies mirrored that of traditional markets, with the Nasdaq index falling by 2% and the S&P 500 by 1.6%. Market strategist Joel Kruger pointed out that expectations for interest rate cuts by the US Federal Reserve are lower as inflation remains high, impacting the cryptocurrency market negatively. This is exacerbated by the return of favor towards the USD, putting additional pressure on cryptocurrencies. With Bitcoin and the cryptocurrency market on track for their worst monthly decline since November 2022, investors are bracing for further turbulence ahead.
