The downturn in the crypto market just accelerated.
As of press time on Thursday (10:50 UTC), bitcoin traded at USD 6,000, down more than 15% over the past 24 hours. The move occurred amidst erratic trading in digital assets, with price reaching as low as the USD 5,500 level before recovering.
The significant slump in bitcoin prices was accompanied by even larger selling in major altcoins, with ethereum (ETH) dropping more than 30%, XRP falling 26%, and litecoin (LTC) trading 30% lower over the same time period.
BTC price chart:
“Investors are moving out of any risky assets,” Vijay Ayyar, Singapore-based head of business development at crypto exchange Luno, told Bloomberg. “Even though Bitcoin is compared to gold as a safe-haven asset, it’s very under-penetrated and is considered more as a risky asset to hold at this point.”
“We’ve seen de-risking across all asset markets,” Jamie Farquhar, portfolio manager at London-based crypto firm NKB, told Reuters. “Bitcoin is certainly not immune to that.”
“This crash has come out of nowhere. It might be linked to poor stock market performances, but I don’t know. All I do know is that a lot of people are buying tokens right now. Perhaps for some traders, this could be an unexpected opportunity to buy low and then sell high at a later date,” blockchain business consultant Lee Jong-cheol, in Seoul, South Korea, told Cryptonews.com.
The crypto market crash occurred as oil – one of the most beaten-down assets this week – crashed down another 7% for the day, and the US S&P 500 futures pointing to an opening 4.8% lower for the stock market. The traditional safe-haven gold, meanwhile stood steadfast during the market panic, trading up a mere 0.4% for the day.
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However, despite a major crash, the bitcoin dominance – or bitcoin’s share of the overall crypto market capitalization – is once again up, reaching levels not seen since late January, as most altcoins are seeing even heavier selling. The dominance figure stood at roughly 65%, up from a low of around 62% in mid-February.
Ryan Selkis, CEO of crypto researcher Messari, said earlier this week that Outside of BTC and ETH, I’d expect a late 2018 caliber bloodbath. Nothing else is critical to own or hold right now outside of these two assets, and in a market that may go down 20, 30, 40%, with an unknowable negative human toll (both health and economic wellbeing), the parlor games of the shitcoin casino are over.”
Given that bitcoin has been widely seen as a hedge against risks in the banking system, many traders are surprised that the digital asset is now selling off just like the stock market. The large and unexpected moves in the bitcoin price were noted by several leading personalities in crypto who shared their thoughts with the community.
Among them was economist and crypto trader Alex Krüger, who said that bitcoin is currently trading like “the exact opposite” of a safe haven, although he noted that stocks are seeing even larger relative declines:
Time to pay attention. Bitcoin is trading like a risk-on asset. Not a safe haven, but the exact opposite. Following… https://t.co/MyL7O8lOJI
Similarly, the widely followed Twitter user @LightCrypto also said that bitcoin is “mirroring risk assets” and that anyone who ignores this is “beyond saving”:
If you continue to stubbornly ignore that Bitcoin is now mirroring risk assets like equities in certain moments, yo… https://t.co/J0YqXllQih
Meanwhile, some also urge people to take a deep breath and remember that the current market reaction may just be “a short-term shock”:
$124.2M worth of long positions was liquidated on BitMEX in the last 40 minutes. Breakdown:
$665 million bitcoin longs were liquidated just now on BitMEX alone, I repeat, $665 million