And we lived to see another market crash. Bitcoin is down 17.5% in only one week and the bottom is still unclear. According to Crypto futures trading information platform Coinglass, about $1,142,000,000 was liquidated in less than 24 hours. Bitcoin is currently, hovering between $35,000 to $36,000 following a brutal bear run. In the meantime, altcoins are pretty much following BTC in the downward spiral. Stay with us as we go over how and why the market crash happened and what can we expect.
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Market Crash Statistics
According to Coinglass liquidation data, a combined number of over $1.14 billion was lost in liquidations. An estimate of $213,000 traders lost all their funds to the market crash.
Naturally, Bitcoin hurt the most with $265.8 million in liquidations followed by Ethereum and Solana with $244.8 and $24.9 million. Polkadot and LUNA are next in line with $17.5 million and $15.43 million respectively. This is very similar to the market crash of summer 2021 when China banned BTC mining in the country.
Why?
We recently published an opinion article stating that Bitcoin is more of a risk-on asset at least for the time being. The deep correction in the crypto market is largely due to the stock market crash that expected on the horizon. In that regard, BTC and subsequently the crypto market will follow the stock market. As of January 2022, nearly all stock market indexes including the S&P 500, Nasdaq and Dow Jones are down.
To follow the breadcrumbs, we should explore why the stock market is down and the answer is blowing in the wind. Inflation or even hyperinflation is looming ahead and the Federal Reserve is willing to sacrifice the equity markets to fight it. At the moment, the Fed has stated that they’re planning to raise interest rates for at least the next two years. The interesting point however, is that even before they commit to any action, the markets are falling one by one like the fallen soldiers on D-Day. This is indicative of a large bubble in the markets and the fact that their fundamentals are ridiculously weak. Basically, years and years of money printing and bloated debt have brought us to this point.
On the other hand, shitcoin pumping by Elon and NFT hype by influencers is also a big contributing factor. Considering the fact that crypto crashes are genuinely more brutal than the stock market, we can see that the crypto bubble is much bigger.
As for the future, the rising interest rates will most definitely happen. With that in mind, the stock market will have a decline in short-term. We have seen how the speculation alone can cause a market crash and the real deal is not behind us either. In terms of investment decisions, perhaps diversifying your portfolio is a clever decision.
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