Bitcoin’s decline continued on Saturday. The cryptocurrency has fallen more than 50% since November, when it reached its highest point. This adds momentum to the crypto-meltdown.
“Margin positions being liquidated caused a wave of additional sell pressure, as assets that had been held as collateral were forcibly sold to pay for margin loans,” said Hayden Hughes, chief executive officer at Alpha Impact in Singapore.
Bitcoin’s decline from its peak has wiped out more than $600 billion in market value, and over $1 trillion has been lost from the aggregate crypto market. Bespoke Investment Group says that although there were larger percentage draws for Bitcoin as well as the aggregate market this is still the largest ever dollar-terms decline.
Bitcoin plunged to $34,042.78 last Saturday. That’s a 7.2% decline. But, the majority of losses have been recouped. Ethereum was also down, falling 12%. According to Coinbase, Cardano and Solana each dropped at least 17%.
“I would expect it to take some time for a bottom to form and for confidence to return, before expecting any sort of bullishness,” Hughes said.
With the Federal Reserve’s intentions on reining in inflation rocking both cryptocurrencies and stocks, a dominant theme has emerged in the digital-asset space: cryptos have moved in the same way as equities and many other risk assets.
Further cautionary measures were taken on Friday. Bloomberg News reported the Biden Administration is planning to publish a government-wide digital asset strategy as early as next month. It will also ask federal agencies for an assessment of the opportunities and risks they present.
–With assistance from Andrew Davis.