Yahoo Finance Bitcoin crash triggers crypto rout wiping out $15bn overnight
A steep sell-off across the cryptocurrency market wiped out more than $15bn (£13bn) overnight. Bitcoin fell from $19,997 to $18,806, with the price shedding over $1,000 in value in less than 24 hours.
The crypto market cap was hovering around the $1tn mark on Tuesday, then a sudden rapid sell-off saw all blue-chip crypto charts turn red as prices plummeted.
The combined valuation of all cryptocurrencies fell by over $15bn to now stand at around $984bn.
Bitcoin (USDC-USD) dropped by 5.5% in the last 24 hours to $18,806. Ethereum (ETH-USD), the second largest cryptocurrency by market cap, dropped 8.7% to $1,519.
Read more: Crypto live prices
At first, there were no obvious reasons as to why the crypto-market saw such a sudden wipe-out.
But analysts have attributed the massive sell-off to the macroeconomic reaction to Russia cutting off natural gas supplies to Europe.
Germany, Italy and other European countries are dependent on Russian gas, and traders reacted with risk-off behaviour.
After the massive sell-off, there were heavy liquidations across all blue chip crypto positions.
Data from coinglass.com reveals how long positions took the lion's share of positions liquidated with an approximate 60% to 40% long/short ratio.
In the past 24 hours, 102,144 crypto traders were liquidated, the total liquidations come in at $356m.
The largest single liquidation order happened on the Okex exchange and was a BTC-USDT swap valued at $2.57m.
Read more: Top 5 crypto blunders that paid millions of dollars to unknown accounts
The liquidations of leveraged bitcoin long positions accelerated the market's downward plunge.
Another reason for the tilt into the red was a pattern that traders have recognised; that there is a stronger downside correlation between bitcoin and the Nasdaq (^IXIC) than the reverse price movement.
Again, bitcoin followed US tech stocks into negative territory with the Nasdaq Composite sliding 0.74% to 11,544.91, revealing a worrying seventh day of losses, its longest since 2016.
The Dow Jones (^DJI) closed more than 100 points lower in the post-Labour Day session.
The Dow Jones Industrial Average fell 173.14 points, or 0.55%, to close at 31,145.30 and the S&P 500 (^GSPC) slipped 0.41% to 3,908.19 after a day of heavy selling on Tuesday.
Michael Burry, the hedge fund manager who was characterised by Christian Bale in The Big Short, tweeted out a particularly bearish statement this morning, stating: "Crypto crash. Check Meme crash. Check. SPAC crash. Check. Inflation. Check. 2000. Check 2008. Check 2022. Check."
Crypo crash. Check
Meme crash. Check.
SPAC crash. Check.
Inflation. Check.
2000. Check
2008. Check
2022. Check.— Cassandra B.C. (@michaeljburry) September 7, 2022
The Dollar Index has moved higher as a result of the macroeconomic changes.
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The yield on US 10-year Treasury bonds jumped as much as 0.162 percentage points to 3.353% on Tuesday, adding to the rout out of stocks.
The week ahead seems gloomy for investors in both traditional and crypto markets, who are looking ahead to a possible fresh rate hike decision from the European Central Bank due out later this week.
Watch: North Korea's Crypto activity Dangerously Underestimated - The Crypto Mile
