Following Bitcoin’s (BTC) recent fall, the entire crypto market valuation fell below $1 trillion for the first time since January 2021.
Bitcoin has dropped more than 12% in the last 24 hours and is now trading around $23,900, its lowest level since late 2020. Its recent drop was precipitated by higher-than-expected inflation figures on Friday, and the price rapidly worsened over the weekend.
However, Ethereum, the second most valuable cryptocurrency, has plunged far more than Bitcoin. The coin is presently worth $1,196, or almost 75% of its all-time high. Concerns about a DeFi breakdown have weighed on Ethereum in the short term.
With the two largest cryptocurrencies seeing huge drops, overall crypto market value has dropped by more than 12% in the last 24 hours to $961.8 billion, falling below $1 trillion for the first time in 17 months.
The primary source of market concern is a two-day Federal Reserve meeting beginning on June 14. Investors are concerned that the Fed may raise interest rates more than expected, particularly in light of higher-than-expected inflation statistics in May.
Furthermore, due to a severe liquidity shortage, prominent crypto lender Celsius banned withdrawals on Monday. The move is the result of a depegging of staked Ethereum (stETH), which exposes multiple other DeFi platforms to liquidation.
Uncertainty about staked Ethereum, as well as concerns that platforms may sell their crypto assets to cover their bets, has roiled larger markets.
Losses in Bitcoin and Ethereum have spread to the rest of the market, with all of the top-50 cryptocurrencies experiencing significant drops in the last 24 hours.
Major altcoins such as Solana, Cardano, and Ripple have dropped between 12% and 20%.
While significant Bitcoin and Ethereum holders have yet to face a margin call, retail traders are bearing the brunt of liquidations.
According to Coinglass data, the crypto market has experienced roughly $1 billion in liquidations in the last 24 hours.
Long bets in Bitcoin and Ethereum accounted for 40% of all liquidations, amounting to more than $400 million.
The cryptocurrency market is experiencing its highest levels of liquidation since the peak of the Terra crisis in May.