The cryptocurrency market took a hit today, with the total market capitalization dropping by around 3% to about $3.65 trillion on Dec. 18.
This sudden plunge has left many investors scratching their heads, trying to understand the core catalysts behind this downturn and whether more losses are on the horizon.
24-hour performance of large-cap cryptocurrencies. Source: Coin360
Let’s look closer at the factors driving the crypto market down today.
Bitcoin leads the market slump
Today’s crypto market decline is part of a correction that started during the late New York trading hours on Dec. 15 when Bitcoin (BTC) tumbled from an all-time high of $108,364 reached on Dec. 17 on Bitstamp.
BTC price dropped as much as 5% to an intra-day low of $103,173 on Dec. 18. The decline in BTC triggered panic selling among crypto investors, with cryptocurrencies dropping across the board.
Ether (ETH) extended its two-day losses, dipping as low as $3,800 on Dec. 18, marking 4% losses over the last 24 hours.
Other top-cap cryptocurrencies posting significant losses on Dec. 16 are Dogecoin (DOGE), Cardano (ADA)and Tron (TRX), which are down 3.4%, 3.4% and 6%, respectively.
Massive liquidations across the derivatives market accompanied this downturn in the crypto market.
Data from CoinGlass shows that a total of $419 million have been liquidated over the last 24 hours, with $333 million making up long positions. Long BTC leveraged positions totaling $53 million have also been liquidated on the day.
Total crypto liquidations. Source: CoinGlass
A similar move was seen on Dec. 9 in the derivatives market when more than $1.5 billion long positions were liquidated. These liquidations accompany an 11% drop in TOTAL—the combined market capitalization of all cryptocurrencies—with more than $400 billion being wiped off the crypto market.
A predominance of long liquidations suggests that the crypto market was overleveraged on the bullish side, primarily due to profit-taking and risk-off mode ahead of today’s Fed decision on rate cuts.
Risk-off sentiment pushed the crypto market down
The ongoing correction in the crypto market mirrors the…
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