Bitcoin Falls 8% After Sudden Market Crash

Bitcoin, the world’s top cryptocurrency, fell 8% to $36,300 today.

Bitcoin's price hit highs of $40,000 yesterday shortly after President Biden announced that the US will spend $6 trillion in the next year to save the economy from the effects of the coronavirus pandemic. It’s the highest sustained US government spending since World War II.

Save for a few anomalies, all of the top 100 coins by market cap are down by around 10% in the past 24 hours. Data from CoinMarketCap shows that the decline started at 5 am UTC and steepened at 10 am.

Ethereum, the second-largest cryptocurrency by market cap, currently trades for $2.500, down 10.21% in a day and 8.60% in a week.

The fourth-largest cryptocurrency, Binance Coin, is down 11% since yesterday, now trading for $329. Its price has plummeted almost 15% over the past week.

Cardano is down by 11.36%, even though the blockchain just launched the testnet for its long-awaited smart contract platform, which will eventually turn the network into a direct competitor to Ethereum.

XRP fell 12% in price and became the seventh-largest cryptocurrency by market cap; the coin was supplanted by Dogecoin, now the sixth-largest with a market cap of $41 billion.

It is unclear what is behind the crash. Small hits came from Burger Swap, the Binance Smart Chain-based decentralized exchange, which was last night hacked for $7.2 million, and ho-hum criticisms against Bitcoin by Japan’s Central Bank Governor.

Earlier this month, the reasons behind the crashes were much clearer. Elon Musk, the CEO of Tesla and SpaceX, trashed Bitcoin as environmentally unsound, causing the price to collapse from highs of about $64,000 last month.

Then bad news from China sunk the price to lows of $30,000; first, national payments institutions supported a 2017 ban against servicing crypto companies, and then the government supported a crackdown on Bitcoin mining and trading.

But the origins of today’s crash, although not quite as dramatic, are less obvious.