- The cryptocurrency market saw a decline when its largest digital currency Bitcoin's prices took a plunge overnight Saturday.
- Bitcoin witnessed a freefall of nearly 17% and tumbled to about US$43000 and subsequently went for a little retreat.
- Derivative-induced trading and the threat of potential derailment of the global economic reopening are cited as the prime reasons for triggering the downfall in crypto prices.
The world’s most prominent cryptocurrency, Bitcoin, nosedived by nearly 17% and lost about US$10,000 on Saturday.
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The largest crypto dropped to a low of about US$43,000 in a 24-hour period from Friday to Saturday, with the overall crypto market shedding nearly a fifth of its value and plunging to US$2.2 trillion.
Which other cryptos reported a similar abysmal performance?
Ether, the second-largest token, too witnessed an unfavourable performance as the token slumped by around 17.4% to a low of near US$3,500 on Saturday.
However, it has recovered a little and is currently trading at US$4,114.99.
Other cryptos which experienced a similar fate and shrunk were Cardano, Solana and Ripple.
Why did crypto prices take a tumble?
Analysts have attributed this dip in cryptocurrencies to the current volatile period pertaining to the financial markets, with increased inflationary pressures forcing central banks worldwide to be stringent with their monetary policies.
Moreover, the emergence of a new COVID-19 variant, Omicron, is also threatening to derail global economic reopening.
Another possible factor for the sudden decline in Bitcoin prices can be attributed to the unwinding of heavily leveraged crypto derivatives.
It is noted that this mix of profit-taking and macroeconomic concerns prompted nearly billions of dollars of sell-off across cryptocurrencies.
As market sentiment worsened, crypto investors began unloading their digital assets. However, no precise reason for crypto prices plummeting on the weekend was cited.
Investors are being cautioned against reducing their Bitcoin holdings or other cryptos unless and until a breakdown is established as a long-term upward momentum is still being observed in the crypto market.