Bitcoin plummeted to a 3-week low after sudden selling in the crypto market of all major cryptocurrencies. The reason for the sudden drop is not immediately evident, but we might have an explanation.
Bitcoin dropped below $21.6k
Bitcoin dropped as much as 6.9% to $21,906 over a few minutes during the European morning. Afterwards, it recovered slightly to $22,047. Now it stands at $21,556 according to data on CoinMarketCap. An overall drop of 8.27% over the past 24 hours. Ethereum, the second-largest cryptocurrency by market cap, has also slipped to around $1,728, a 6.2% decline compared to yesterday.
Compared to the last November, the market capitalisation of Bitcoin has more than halved. During that time, the market cap was around $1.27 trillion. Today stands at a $416 billion low.
Before the sudden drop in the market, over $572 million from 162,106 traders have been sold in the crypto market. All this happen in the past 24 hours, as data from Coinglass suggests. The largest single liquidation order happened on Binance – ETHUSDT value $4.41M.
When it comes to other cryptocurrencies, the situation is not great either. ApeCoin is 15.55% down in the last 24 hours. The same for the meme coins: DogeCoin (14.26% down) and Shiba Inu (12,60% down). It hasn’t been more than 3 days since these tokens gained momentum because of an increased enthusiasm in the crypto market. All related to the new Shiba Eternity game and the Ethereum upgrade. Other coins like XRP (10.44%), Cardano (14.14%), Solana (12.27%) and Polkadot (11.78%) have also lost market cap over the past 24 hours, according to CoinMarketCap‘s data.
Bitcoin reacts to the Fed and DeFi activity
The Fed is expected to increase the rates next month. St. Louis Fed President James Bullard favours a 0.75% rate hike. Mary Daly, San Fransisco’s Fed President, also agreed a 0.50% or 0.75% rate hike next month, as reported by Reuters. The crypto market’s bearish price is more than likely to be linked to this expectation. Also, have in mind the reduced DeFi activity that we have seen this year. The cryptocurrency market had a rough start in 2022 and the collapse of multiple crypto projects created something like a domino effect that impacted almost everyone in this space. This image highlights the risks of decentralized finance and poor risk management to all investors out there.