Cryptocurrencies experienced a bear market in the past few days, with Bitcoin losing more than 20% of its value. This is defined as a price drop of 20% or more, and it has caused a sea of red to cover the entire cryptocurrency market. The largest cryptocurrency by market capitalization, Bitcoin, dropped from $73,000 USD to around $57,000 in mid-March. Analysts attribute this decline to lack of attention towards spot ETFs in Hong Kong and investor concerns about interest rates.
During the same period, the CoinDesk 20 (CD20) market index also fell significantly, with other cryptocurrencies like Ethereum (ETH) and Solana (SOL) witnessing 9-11% declines. Currencies with several hundred million USD in market capitalization lost between 15-25% in just a matter of hours. Futures trading positions worth nearly $100 million were liquidated on exchanges in the past hour, totaling close to $500 million in liquidations over a 24-hour period. This occurs when the loss of trading orders surpasses the initial deposit amount due to the use of large-scale leverage in futures contract trading.
The decline in cryptocurrencies is in sync with traditional markets as the Nasdaq index fell 2% and the S&P 500 lost 1.6% on the same day. Experts attribute this downward trend to expectations for higher interest rates by the US Federal Reserve due to persistent inflation, which is also leading to a stronger position for the USD.
With today’s sharp decline, both Bitcoin and the overall cryptocurrency market are on track for their worst monthly decline since November 2022. In April alone, Bitcoin lost nearly 18% of its value while Ethereum dropped around 19%. Altcoins such as SOL, Dogecoin (Doge), and AVAX are facing even deeper corrections of 35-40% this month. The total cryptocurrency market capitalization has decreased by almost 20% since its peak in March, marking the largest decline in cryptocurrency capitalization since June