Hundreds of billions of dollars were wiped out of the cryptocurrency market on Tuesday, following an industry-wide crisis that saw the prices of key cryptocurrencies, such as BTC, ETH, ADA, and SOL, fell sharply from near-record highs this week.
Over the previous 24 hours, most major tokens, including ethereum, XRP, cardano, solana, and dogecoin, have witnessed comparable precipitous declines, plummeting between 7% and 10%. Except for the largest, bitcoin, and tether, a stablecoin linked to the US dollar, ether is the most valued cryptocurrency by market capitalization.
Key facts
According to CoinGecko, the price of bitcoin fell to roughly $60,500 on Tuesday morning, down 8% from the previous day.
Over the previous 24 hours, most major tokens, including ethereum, XRP, cardano, solana, and dogecoin, have witnessed comparable precipitous declines, plummeting between 7% and 10%.
Ether slid 9.6% to roughly $4,300, Binance’s BNB 8.9% to $590, Solana 7.5 percent to $225, and Cardano 9 percent to $1.90, out of the four most valuable cryptocurrencies by market capitalization (excluding the largest, bitcoin, and tether, a stablecoin tethered to USD).
XRP, polkadot, dogecoin, and shiba inu coin—the next four most valuable cryptocurrencies by market capitalization, excluding another stablecoin, USD Coin—fell 9.3%, 12.4 percent, 8.8%, and 6%, respectively.
The losses are part of a larger rout in the cryptocurrency market, which is now valued $2.76 trillion, down 8.6% from the day before, according to CoinGecko.
Key Background
The crash comes less than a week after bitcoin reached a new all-time high of $69,000. This was part of a larger rally that followed a market crash earlier this year, in response to China’s tightening regulatory environment and growing concerns about bitcoin’s environmental impact.
Many of the gains made during the pandemic were wiped out by the crash, which was fueled by a slew of factors including an influx of retail investors, more ways to trade digital currencies, and the growing popularity of meme stocks and tokens fueled by online forums like Reddit and celebrity endorsement.
It’s unclear why the Bitcoin market is collapsing, while various variables could be at play. Chinese authorities stepped up their efforts to crack down on cryptocurrency mining on Tuesday, blaming the process’s high energy usage and carbon footprint. Following China’s previous crackdown on cryptocurrency mining, a large number of cryptocurrency miners fled the country, many of whom ended up in the United States.
Responses to President Joe Biden’s infrastructure package, which contains measures for potentially regulating and taxing bitcoin, could also be a factor.
