There was blood on the streets of crypto as a mass market sell off became one of the industry’s biggest ever daily losses.
On Sunday, global market cap sat at an all time high of $1.76 trillion. At the time of writing, it’s down to $1.46 and appears to be on a steep downward trajectory.
Global Market Cap in decline. IMAGE: CoinMarketCap
As prices tumbled, trading volume ballooned as investors attempted to bailout. Trading volume is up 60% market wide, with some $243 billion changing hands in 24 hours, according to CoinMarketCap.
The biggest drop was Bitcoin. From highs of $58,000 over the weekend it went to $47,700 in just 19 hours. This was the largest single-day fall Bitcoin has ever seen.
Bitcoin’s price has dropped from a high of $58,000 to a low of $47,700 within 19 hours. This was the largest single-day fall Bitcoin has ever seen.
Since then, the price has rebounded to $53,00, up 11%. The cryptocurrency is now aiming to retake the $1 trillion market cap mark it lost earlier today.
Bitcoin’s previous largest daily drop came just one month ago on January 11. After breaking the $40,000 bracket—which was then an all-time high for Bitcoin—the cryptocurrency fell to $32,000, before...
Commentators have been quick to point out this is all just part of Bitcoin’s cyclical price movements.
BTC retracements and dips during the 2017 bull run ranges around 30-40%. Expect the same during this bull run. Great time to buy on the lows! #BTC$BTC#bitcoinpic.twitter.com/Y1R0F7S9SA
Others expressed relief that the sell off had at last happened, including ardent Bitcoin supporter Raoul Pal.
It it just me that feels relief when the BTC sell offs come? You know they are coming but when they finally arrive you can switch into buy the dip mode. March is a historically weak month. Not sure if this is the bigger March correction of just another cheeky shakeout . pic.twitter.com/GMH7evctX5
Why the sudden sell off? While many crypto watchers feel its part of Bitcoin and crypto's normal operating cycle, it’s this column’s contention that big events are often explained by forces outside of the industry in question.
Market Watch has always tried to bind stocks and bonds more closely to crypto as digital money becomes a more integral part of the global financial system and the two become more inextricably linked.
When historians look back on 2020 and ask what will it be most known for, there are two stories they could tell. On the one hand, 2020 could be defined by a planet rocked by a pandemic that caused millions to die, and an economic fall out that will be felt long after a vaccine is rolled out.
On the other hand, historians might say that 2020 was the year investors and their returns took off into the stratosphere. In particular, Bitcoin’s record-breaking price surge, and the American stock market...
In March 2020, the US stock market tanked as Covid set in. Bitcoin’s price did the same. But then something strange happened: they both bounced back. The correlation between the S&P 500 and Bitcoin started to more closely intertwine.
Bitcoin and S&P 500 correlation. IMAGE: Decrypt
If we look at what happened on Wall Street yesterday, we can see a similar pattern: tech stocks took a bath.
The Nasdaq, the home of big tech stocks closed down 2.46%, which is a lot. Tesla lost 8.5%, Paypal was down 4.6, Apple lost 3%, Microsoft 2.6% and the list goes on. These, along with cryptocurrencies were all havens for investors that had gone looking for assets that weren’t affected by the closing of the global economy.
But yesterday, bond yields, one of the less explored and let’s face it, drearier sides of markets suddenly shot up. This is important.
Bond yields act as a useful indicator of the direction of interest rates and, more generally, future economic activity. When bond yields are low, investors tend to go in search of better performing, and typically, more risky stocks elsewhere. Hello crypto!
When bond yields start to shoot up, investors flock back to them, selling off their shares in stocks to park their money in the safety of predictable returns.
Yesterday, US Treasury bonds rose to their highest level in a year. While some investors see this as a positive sign, others see it as a signal that markets are overheating, and that stock market growth may be coming to a close.
"There's good reasons for yields to go up: economic activity. And there's bad reasons: inflation," Mohamed El-Erian, Allianz’s chief economic advisor, told CNBC on Monday. "Economists, even those who have long supported a big fiscal push, are saying be careful. Going big may be too big."
"There's good reasons for yields to go up: economic activity. And there's bad reasons: inflation," says @elerianm on inflation worries in the economy. "Economists, even those who have long supported a big fiscal push, are saying be careful. Going big may be too big." pic.twitter.com/R5bk5grKOY
There's renewed fear that Joe Biden's massive $1.9 trillion stimulus bill will push the economic recovery off a cliff, leading to inflation and a devaluation of the US dollar. These fears have been building over the last week.
Mark Zandi, credit-ratings agency Moody’s chief economist said overvalued assets such as stocks, and cryptocurrencies, are the biggest risk to the economic recovery. He said the sky-high valuations that both markets have been experiencing are vulnerable to major crashes that could reverberate through the entire economy.
So while the crypto-believers are content with the notion that "some things just crash" more astute investors would be wise to focus on the bigger picture and plan accordingly.
Hamak Gold, an early-stage mineral exploration company focused on discovering orogenic and greenstone-hosted gold deposits in Liberia, West Africa, is shifting part of its treasury into Bitcoin.
Listed on the London Stock Exchange since 2022, the company announced Thursday that it had raised £2.47 million through a share placement, though it did not specify when the funds were secured.
The "injection of new capital" makes Hamak Gold "well-positioned to pursue two core objectives in parallel,”...
Who doesn't want its own stablecoin these days? Well, don't count out the Russian war machine.
Crypto is once again finding use cases in Russia, as state-owned weapons manufacturer Rostec now plans to launch its own stablecoin, dubbed RUBx, Russian state media reports. The digital token will be backed by rubles and available on Tron.
News agency TASS first reported the news, quoting Alexander Nazarov, Rostec's deputy general director, who claimed that the token will be backed one-to-one by ruble...
Here’s some ammo for decentralization advocates: Hackers stole approximately R$800 million ($140 million) from Brazilian banks after paying a technology company employee just R$15,000 ($2,760) for his corporate credentials, according to law enforcement officials investigating what they describe as the largest digital heist in the country's history.
The attack targeted C&M Software, a São Paulo-based company that connects smaller banks and fintechs to Brazil's Central Bank infrastructure, includi...