Crypto Market Takes a Sudden 10% Dive in 2 Hours – What Went Wrong

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Crypto Market Sudden

The cryptocurrency market witnessed a major correction as prices of Bitcoin, Ether, and other digital assets sharply declined by over 10% within a short span of two hours. Yesterday, at around 3 PM, Bitcoin was trading above $45,000 but started seeing selling pressure after that. By 5 PM, its price had nose-dived to under $42,000, almost wiping out all the gains made in 2023. Several other cryptocurrencies incurred even deeper losses during this time period. Ether went from trading at $3,200 to below $2,200, amounting to a 30% crash from its local high. The total market capitalization of the crypto ecosystem declined by over $300 billion as panicked traders offloaded their holdings. This sudden downturn caught many leverage traders off guard, leading to a flurry of liquidations across exchanges.

What Led to the Crypto Market Rout?

There is no clarity around what exactly triggered this sharp correction. Some Analysts believe that a report claiming US regulators will reject all pending proposals for spot Bitcoin ETFs unsettled the market sentiment and fueled a sell-off. The timing of the crash and this report released an hour before certainly raises questions. Others argue that this dip was more due to technical indicators flashing sell signals and long liquidations, thereby exacerbating the price declines rather than any fundamental news.

Crypto Market Sudden

The crypto industry and regulators have had a strained relationship over regulatory concerns, leading to an environment of uncertainty and mistrust. The notion is that rejecting the ETF applications would allow more time for further scrutiny. However, with no official statement yet, the impact of this report remains debatable. What is clear is that the crash resulted in over $577 million in long derivative positions getting forcefully liquidated across major exchanges, with the largest being a $14.26 million long for Bitcoin and Tether.

While such volatility is not unusual for the highly speculative sector, long- term investors remain optimistic about the future of the asset class, given continued growth in real-world adoption. The industry’s relationship with regulators also needs to mature to provide more price stability over time. Although retail trader confidence temporarily declined, analysts expect prices to rebound soon. The long-term market outlook remains positive.

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About author
Harry is a crypto enthusiast and experienced trader with a track record of success. With a deep understanding of blockchain technology, he has analyzed market trends and identified profitable opportunities, resulting in impressive returns. Harry 's expertise lies in developing effective trading strategies that leverage the potential of cryptocurrencies. Through his articles, guides, and educational resources, he shares his insights and knowledge, helping individuals make informed trading decisions. With a keen eye for market patterns, Harry has navigated the volatile crypto landscape with confidence. Stay tuned for valuable perspectives and expert advice from Harry as he contributes to the Ailtra platform.
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