Bitcoin dropped nearly 10% in just a few hours, causing red to cover the market and many other currencies losing more than 20% of their value.
Cryptocurrencies are entering “bear market” territory – price drops of 20% or more.
Bitcoin – the largest cryptocurrency by market capitalization – dropped nearly 10% as of this afternoon, reaching the threshold of 57,000 USD. Compared to its all-time high of over $73,000 reached in mid-March, the currency lost more than 20% of its value.
According to analysts, selling pressure has skyrocketed in the cryptocurrency market because spot ETFs in Hong Kong do not attract attention and investors are concerned about interest rates.
The CoinDesk 20 (CD20) market index fell even more during the same period, as other cryptocurrencies such as Ethereum (ETH), Solana (SOL) recorded a 9-11% decline. Currencies with a capitalization of several hundred million USD lost 15-25% in just a few hours.
Theo Coinglass, nearly 100 million USD of futures trading positions on exchanges were liquidated in the past hour. In 24 hours, nearly 500 million USD was liquidated. Futures contract trading allows investors to use large-scale leverage, up to 50-100 times the initial capital. Liquidation takes place when the loss of trading orders exceeds the initial deposit amount.
Bitcoin and the top digital currencies in the market lost 9-11% on May 1. Image: CoinMarketCap
The decline of cryptocurrencies goes along with traditional markets. A series of US economic reports show that growth is slowing and price pressure remains high. The Nasdaq index fell 2% on the day, while the S&P 500 lost 1.6%.
Joel Kruger, market strategist at LMAX Group, stated in a report on April 30 that expectations for interest rate cuts by the US Federal Reserve (Fed) are significantly lower as inflation remains hot. This is weighing heavily on the cryptocurrency market.
“We see evidence that the Fed needs to keep interest rates higher for the long-term policy outlook, despite investors calling for an adjustment,” Kruger said, adding that the USD’s return to favor There is also pressure on cryptocurrencies.
With today’s sharp decline, Bitcoin and the cryptocurrency market are headed for their worst monthly decline since November 2022 – when Sam Bankman-Fried’s FTX exchange collapsed.
In April alone, this currency lost nearly 18%, while Ethereum dropped about 19%. Small-cap cryptocurrencies are under deeper correction pressure. Altcoins that investors are interested in such as SOL, Dogecoin (Doge), AVAX decreased by 35%-40% this month.
The total cryptocurrency market capitalization has decreased by nearly 20% in value since its peak in March. This is also the largest decrease in cryptocurrency capitalization since June 2022, according to data from TradingView.