Bitcoin is crashing in one of the worst sell-offs in history – here’s why
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Bitcoin has faced a major drop in value, falling by almost 20 percent in the past day, reaching its lowest point in half a year.
Many top cryptocurrencies have experienced significant decreases, with eight out of the top 10 most valuable tokens dropping by over 20 percent since Sunday. The overall crypto market has lost over $300 billion in value, causing concerns among investors that the upward trend that started in November 2022 might be ending.
The drop in the crypto market can be traced back to larger economic troubles, which have resulted in significant losses for stock markets in Europe and Asia on Monday. When traditional financial markets start to decline, the crypto market usually follows suit as investors try to sell off risky and unpredictable assets.
During the trading session in Asia on Monday, prices of high-risk investments sharply dropped. This was due to a disappointing report on US employment and increased unemployment rates from Friday, along with a stronger Japanese yen following a recent decision by the Bank of Japan to raise interest rates. Simon Peters, a cryptocurrency expert at the eToro online trading platform, mentioned that certain technical signals indicate that bitcoin may have reached its lowest point before a possible rebound.
It's possible that the price could rise in the next few days. We'll have to wait to find out how high it will go.
The latest decline started after disappointing employment numbers in the US raised worries about the largest economy slowing down. This caused Japan's Nikkei 225 to plummet by 12.5%, setting a new record. Additionally, the FTSE 100 and Euronext 100 both saw declines of around two to three percent.
In the world of digital currency, bitcoin fell below $50,000 (£39,000) for the first time since February. Meanwhile, Ethereum (ETH) also experienced a significant drop, losing over $1,000 in just a few days, plummeting from $3,300 at the beginning of the month.
"Anxiety has spread throughout the cryptocurrency markets as traders observe continuous selling activity," stated Arthur Firstov, the chief business officer of a crypto payments company, in an interview with The Independent.
The digital token market is experiencing significant declines along with global stocks as concerns about a potential US economic slowdown are leading to speculation about the Federal Reserve implementing an emergency interest rate cut.
Mr. Firstov stated that cryptocurrencies are still seen as a volatile asset that investors turn to in times of market uncertainty. However, he believes that the crypto space has experienced significant growth recently, which should make it more stable and able to weather sudden drops in value.
This year has experienced two significant occurrences for bitcoin, both contributing to a surge in price that reached a record high of $74,000 in March.
The initial milestone was the green light given to the inaugural bitcoin spot ETF by the SEC in January. This decision marked a significant influx of institutional funds into the cryptocurrency market, totaling billions of dollars.
Next, there was the bitcoin halving, where the rewards for mining the digital currency were reduced by half for the first time in four years. This decrease in available supply, along with the rise in demand, helped to increase the value of bitcoin and other cryptocurrencies prior to the recent market downturn.
