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$200 Billion Wiped Off Cryptocurrency Market As Major Coins All Plummet

Hannah Blackiston

Published 

$200 Billion Wiped Off Cryptocurrency Market As Major Coins All Plummet

A market-wide crash has brought Bitcoin toppling down under US$60,000 over the last 24 hours and knocked up to 10 per cent off Ethereum, Binance's BNB, Solana, Cardano and Ripple's XRP.

The sudden fall wiped around $200 billion from the combined crypto market, after it hit a record high last week of around US$3 trillion.

It isn't clear what triggered the sell-off, but record highs are thought to have caused a global desire to lock in profits. The whole market capitalisation fell by around 7.5 per cent after significant growth over the last few weeks.

Advantus Media / Alamy Stock Photo
Advantus Media / Alamy Stock Photo

The crash comes after the first major upgrade was made to Bitcoin in four years last week.

The Taproot update created greater transaction privacy and efficiency and unlocked the potential for 'smart contracts', which can eliminate the middleman from transactions.

Earlier this month, a ban on Bitcoin mining in China saw the country fall from its peak of three-quarters of all Bitcoin mining to essentially zero, with the US taking the lead.

Experts say it's unlikely that change led to the sell-off however, as China has been trying to distance itself from the industry for a while.

Two weeks ago, a crypto industry ETF landed on the ASX, the first to offer investors exposure to companies involved with cryptocurrencies. On its first day, the ETF broke records for a new managed investment on the ASX and amassed $42 million in funds by the end of the session.

While cryptocurrency is a notoriously volatile asset, there is a concern that this recent drop could lead to a 'domino effect' and more sell offs.

Ira Budanova / Alamy Stock Photo
Ira Budanova / Alamy Stock Photo

"After several days of gains, which saw Bitcoin hover near its all-time high as many other altcoins managed to reach new highs, we are seeing a significant pullback," said Walid Koudmani, an analyst at XTB Market, told Bloomberg.

"The extreme volatility that the market is prone to could lead to a potential domino effect if more negative news were to emerge and take prices to new lows."

The other theory is that the current sell-off is a correction for the industry after significant growth in 2021.

Bitcoin hit an all-time high on November 9, topping US$67,000. This was after previous peaks in March and October.

Cryptocurrency has faced scrutiny over the last few months for its environmental impact. In May, Tesla founder Elon Musk said the company would no longer accept Bitcoin as payment due to the 'rapidly increasing use of fossil fuels for bitcoin mining'.

This decision was despite buying $1.5 billion in Bitcoin in February.

Another possible impact on the price of cryptocurrency could be US President Joe Biden's infrastructure bill, which includes provisions for potentially regulating and taxing cryptocurrency.

Featured Image Credit: Panther Media GmbH / Alamy Stock Photo

Topics: Bitcoin, News, Cryptocurrency, Australia

Hannah Blackiston
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