The past two days have been a bloodbath for the crypto market. On August 5, the world’s largest cryptocurrency, Bitcoin, traded below $50k, down more than 15%. But Bitcoin isn’t the only cryptocurrency that has plummeted over the last 24 hours.
Ethereum has been battered even more, falling 22% to $2,250. Other popular cryptocurrencies, such as BNB, Solana, Dogecoin, XRP, Shiba Inu, and Cardano, were also down by 16% to 18%, and others plummeted to their yearly lows.
As stated by CoinGlass the market had a nearly $1.14 billion liquidation. The market downfall is coming as a surprise, as just a week ago, Bitcoin attempted to surpass its all-time high of around $73k, and it hit $70k.
But why has the crypto market crashed, losing over $1 billion in liquidation in just a day? There are several reasons why this must have happened in the crypto market.
Experts blame the crypto market’s collapse on several causes, including diminishing crypto profit reports, deteriorating global economic conditions, growing geopolitical tensions, and retail investor panic.
Others believe the fall is due to repayment plans by bankrupt cryptocurrency lender Genesis Global Capital, which has finally finished its restructuring and is now in the process of repaying its debt to creditors after three years.
Some attribute this decline to the Bank of Japan’s decision to boost interest rates from 0% to 0.25%. This is the first rate increase in years, raising the cost of holding leveraged investments supported by cheap YEN. As a result, investors have less capital to invest in cryptocurrency, exacerbating financial market volatility.
Another factor that might have driven the drop in cryptocurrency is the increased chance that Kamala Harris may defeat Donald Trump in the forthcoming election. With Harris raising over $300 million and gaining traction, PredictIt gives her a 53% chance of winning. Investors are worried about this as they are not certain of the policy changes Kamala Harris will make, which will undoubtedly affect the crypto market.
Even though Bitcoin and other currencies are recovering, as seen in the chart, the impact of the market decline will certainly be felt in the crypto market for the remainder of the year.
