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Surely you have not overlooked what has been happening with the cryptocurrency market in the past few days. We are much more intrigued by the fact that Bitcoin's price has dropped below $50,000 in just 24 hours, representing a 15% decrease.
Similarly, Ethereum also experienced a significant price decrease, going from $2,900 to $2,300, with a nearly 21% decline. The same is happening with other major cryptocurrencies, making one wonder what is going on.
It could be said that these two coins go hand in hand, although Bitcoin leads among the rest. However, stating this would simply be a straightforward way of saying that what happens to BTC, has repercussions on the others.
What is affecting Bitcoin and Ethereum, in this case, are primarily global economic factors that need to be analyzed. For many, it may be an opportunity as a substantial price drop signifies a "discount" in acquiring these cryptocurrencies, while for others, it means a brutal loss in their portfolio funds.
The scale of this widespread decline is quite steep. We are talking about a 15.3% market capitalization drop at the time of writing this article. This totals $1.91 trillion, with $998 billion belonging to Bitcoin and $280 billion to Ethereum.
The main factor to consider is a significant global recession, which is nothing but a decrease in economic activity caused by related factors. What came to mind was what was happening in the Middle East between Israel and Iran. However, there are other factors to consider that could contribute to a general cryptocurrency collapse.
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According to Gary Chen, CEO of the Bitget exchange, on one hand, there are signals indicating a recession in the United States, which undoubtedly will affect other markets. On the other hand, there is the issue of Japan's interest rate hikes, which have recently had a significant impact.
QCP Capital, based in Singapore, has noted a relationship between the cryptocurrency market development and broad economic growth, while also linking how massive sales of ETH have impacted.
In this case, these massive sales led to a widespread market collapse, partly caused by aggressive selling from Jump Trading and Paradigm VC firms.
It is estimated that between Bitcoin and Ethereum, there was a loss of $1 billion in cryptocurrency market position liquidations. As mentioned earlier, much of what happens has ripples affecting others, but it goes deeper into a global geopolitical and financial aspect.
And you, what do you think caused the widespread drop in cryptocurrency prices? Feel free to share your opinion in the comments.
- Main image edited in Canva.
- Graph captures made from CoinGecko.
- I have consulted information in decrypt.co.
- I have used Hive Translator to translate from Spanish to English.