The bloodbath in the crypto market intensified on Thursday, which saw US$200 billion wiped off the crypto market. The crypto carnage market is well and truly has the market in its firm grips. For the second time in the month, the market saw big-billion-day droppings.
In one month, rather in the past 12 days, it has left the overall market cap severely dented and was reduced to US$1.22 trillion on 12 May, witnessing its biggest fall of 13.60%, at the time of writing (11:18 am), according to CoinMarketCap.
Today's collapse was driven by the collapse of the Terra (Luna) and the TerraUSD stablecoin. Terra (Luna) plunged by 95.6% and was reeling at US$0.09107. This was an enormous collapse considering just last month LUNA token had managed to achieve its all-time-high of US$119.18. Bitcoin plunged as it was trading at US$28838, Ethereum dropped by 18.25%, and was trading at 1990.03.
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Today's dip further intensified after Bitcoin lost over 58% of its value since it achieved its all-time high on 10 November 2021 of US$69,044. As extreme panic grips the crypto market, the Fear Index has reached its lowest, dropping to its lowest of 12 according to Alternative.me.
The fear factor has been heightened in the past week especially post the most significant rate hike by the US Federal Reserve. Last week according to the data from Alternative.me, the fear index was at 27.
Let's look at 3 times that billions were wiped off the crypto market.
US$100 billion (6 May)
While the storm was brewing for quite some time, the month of May witnessed its first billion-dollar crash when the crypto market lost about US$100 billion on 6 May. A combined value of US$100 billion was wiped off following the US Federal Reserve's decision to increase the interest rates by 50 basis points.
The following day, Bitcoin and Ethereum fell by 5%. Similarly, Solana, Cardano, and Avalanche suffered 3%.
The ripple effect of the Fed Reserve's decision was also felt in the stock markets such as Dow and Nasdaq as it dropped significant-tech companies' selloff, prompting in Dow Jones Industrial Average to lose over 1,000 points and the tech-heavy Nasdaq fell 5%.
US$200 Billion (9 May)
The crypto market hit the double hundred mark when it registered its first US$200 billion loss on 9 May. The aftereffects of the Fed's decision were clearly visible as Bitcoin, for the first time in three months, had slipped below the US$35000 mark reducing the market cap to US$1.66 trillion on Sunday.
However, other cryptos such as Ethereum and BNB suffered heavy losses, but not as significant as the one witnessed today.
US$100 Billion (21 Jan)
The beginning of the year was indeed an ominous one for the crypto market. Although the crypto market maintained its sluggishness, it had primarily kept the increased selloffs at bay. But on 21 January, in a matter of minutes, almost US$100 billion were wiped off.
Though Bitcoin never came close to its all-time high mark since November 2021, it managed to hold ground. Many BTC detractors suggested that the superlatives have piled up against the leading crypto quickly.
But with, the Federal Reserve's decision to withdraw stimulus from the market had a catastrophic effect on the market. Bitcoin lost more than 12% on 21 January and touched US$36,000, its lowest level since July.
The overall market capitalisation sunk to US$1.57 trillion at one point before recovering slightly in the following days. The loss meant that in January market cap endured a loss of 14.57% in its last 24 hours.
Although the crypto market has witnessed several billion-dollar crashes before, the year 2022 completely changed the crypto market. Traditionally, January and May are good months for crypto markets. Still, as we saw last year, nothing in this crypto market can be taken for granted.
Therefore, one must be very careful while entering the market each time and weigh the pros and cons before making any investment decision.
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