Crypto prices haven’t been this low since early last summer.
Global crypto markets fell 8.5% overnight. That’s right: in 24 hours, the total market capitalization of cryptocurrencies across the globe plunged down to $1.63 trillion.
To put that into perspective: At this time yesterday morning, the total market cap of crypto was still above $2 trillion.
Today’s wipeout is indicative of a general trend this week. Almost all of the top cryptocurrencies have been freefalling over the last seven days. The entire crypto market has had a terrible start to the new year, but things got dramatically worse in the past week.
Market leader Bitcoin dropped 16.5% over the last week to hit a low of $34,420 on CoinMarketCap. Only yesterday, it was riding a thousand dollars above the $40k threshold. The last time Bitcoin hit $35k was on July 25, 2021.
Ethereum posted a seven-day loss of 25%. It currently trades for $2,490. The last time Ethereum’s price was this low was in early August last year.
And how did altcoins fare?
Terribly. Top cryptocurrencies that sank 30% or more in the last seven days include: Solana (SOL), Dogecoin (DOGE), Polkadot (DOT), Avalanche (AVAX), Polygon (MATIC), Shiba Inu (SHIB), and Chainlink (LINK). Virtually every cryptocurrency in the top 35 by market cap is down by double digits this week. Layer 1 chains like Oasis (ROSE) and Fantom (FTM) are among the very few that have bucked the bloodbath.
So there have been staggering losses, but so far, very little by way of obvious explanation. Pick your factor: Is it the Fed announcing aggressive steps to curb inflation; is it crypto tanking alongside tech stocks; is it crypto malaise after mostly "up only" for coins in 2020 and 2021? All of the above?
Alternative cryptocurrencies (altcoins) led the way lower on Friday given their higher risk profile relative to bitcoin. Ether, the world's second-largest cryptocurrency by market cap, was down about 13% over the past 24 hours, compared with a 14% drop in AVAX and a 16% drop in FTM over the same period.
Despite the losses, some analysts still foresee a short-term bounce. "We expect BTC to find a bid around the $35K mark, close to 50% from the top. In the short term, we can bounce to challenge the $45K-$50K zone, but the overall outlook remains bearish as liquidity remains tight," Pankaj Balani, CEO of Delta Exchange, a crypto derivatives trading platform, wrote in an email to CoinDesk.
For now, technical indicators show nearby support at about $37,000 for bitcoin, although stronger support at $30,000 could stabilize a deeper correction.
"Many altcoins are into support at their summertime 2021 lows, making it critical that bitcoin holds support as it sets the tone for the cryptocurrency space," Katie Stockton, managing director of Fairlead Strategies, a technical research firm, wrote in a Friday briefing. Stockton assigns a 30%-70% probability of a continued breakdown below current BTC price levels.
The drop in total market cap has exposed many crypto traders to significant risk. According to Coinglass, there has been nearly $600 million in liquidations during the last 12 hours. Bitcoin led the liquidation pack at $250 million, followed by ether at $163 million and SOL at $10.9 million.
According to OKLink, the liquidation volume on decentralized finance (DeFi) tokens reached $34.3 million on Friday, the highest since December.
Liquidations in the crypto market happen when a trader has insufficient funds to fund a margin call – or a call for extra collateral demanded by the exchange to keep the trading position funded. They are especially common in futures trading.
In the mean time, Buy the Hidden Valley Ranch ,aka the dip, and hold tight