The cryptocurrency market faced a dramatic downturn on Sunday, wiping out $270 billion in value as Bitcoin and Ether saw substantial declines. Bitcoin dropped 11% over the past 24 hours, while Ether plummeted 21%, according to CoinGecko data.
This sharp selloff mirrored a broader slide in global equity markets. In Asia-Pacific, Japan’s Nikkei 225 fell by as much as 7% following the Bank of Japan’s decision to raise its benchmark interest rate to a 16-year high. In the United States, the tech-heavy Nasdaq ended its worst three-week stretch since September 2022, driven by disappointing earnings, a weak jobs report, higher unemployment, and a declining manufacturing sector.
Bitcoin, the world’s largest cryptocurrency, hit its lowest price since February, trading around $54,000, though it remains up nearly 23% for the year. Ether, the native token of the Ethereum blockchain, fell to approximately $2,300, erasing its gains for 2024. Other cryptocurrencies like Binance’s BNB and Solana also experienced significant drops.
The recent market volatility stems from growing fears of a potential U.S. recession, coupled with rising geopolitical tensions. This has driven investors away from riskier assets, including cryptocurrencies. The increasing correlation between crypto and traditional equities has further challenged Bitcoin’s reputation as a safe-haven asset.
“This selloff is a stark reminder that Bitcoin and cryptocurrencies are high-risk assets,” said Tony Sycamore, market analyst at IG. He noted that Bitcoin was testing critical support levels around $54,000 and could face further declines if it breaks below this threshold.
The crypto crash also impacted related stocks, with shares in U.S. crypto mining companies like CleanSpark, Bitfarms, Riot Platforms, and Marathon Digital falling between 12% and 18%. Coinbase shares dropped 10%, and MicroStrategy, known for its significant Bitcoin holdings, slipped nearly 15%.
Despite the recent downturn, the crypto market had previously received a boost from the U.S. Securities and Exchange Commission’s approval of exchange-traded funds (ETFs) tracking the spot prices of Bitcoin and Ether. However, the current selloff underscores the volatility and risks associated with these digital assets.
Investors are now closely watching for new trade data from China and Taiwan, along with upcoming central bank decisions in India and Australia, which could further influence market sentiment.
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