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Highlights
- Major Altcoins Decline XRP, Dogecoin (DOGE), and Cardano (ADA) fall 25%, wiping out December’s gains.
- Crypto Market Slump Market cap drops by 12%, marking the steepest decline in over a year.
- Massive Liquidations Crypto liquidations exceed $2.2 billion, with futures traders losing over $600 million.
The cryptocurrency market has taken a significant hit, with major tokens like XRP (XRP), Dogecoin (DOGE), and Cardano (ADA) experiencing a drastic decline of over 25%. This has resulted in a complete reversal of gains made since December, pushing these tokens back to pre-U.S. election levels from early November. The latest market downturn has brought the broader crypto space into one of its steepest declines in recent years, with most altcoins down by 40-50% over the past month. As a result, the overall market capitalization of cryptocurrencies fell by 12%, the worst drop in over a year. The CoinDesk 20 (CD20) index also suffered, losing 10%, while Bitcoin (BTC) dropped by 6%.
The massive selloff has been attributed to a new wave of tariffs imposed by the U.S. on Canada and Mexico, sparking fears of a global trade war. This geopolitical uncertainty has created a sour sentiment for risk assets, including cryptocurrencies. The impact of this development has been felt heavily in futures markets, with traders in ether (ETH)-tracked products suffering losses exceeding $600 million in just 24 hours, particularly during early Asian trading hours. Additionally, XRP and DOGE positions collectively lost $150 million, while altcoin-tracked products saw losses of $138 million, and ether-tracked futures lost $84 million.
The total liquidations across the market have surpassed $2.2 billion, marking the highest liquidation level of the year and one of the largest in the past 12 months. The largest single liquidation occurred on Binance, with a tether-margined ETH trade valued at $25 million. Analysts have warned that further losses could follow as the week progresses, citing concerns over the overall market sentiment and the continued uncertainty in global trade.
While Bitcoin has been affected by the downturn, Ethereum’s (ETH) decline has been particularly striking. Ethereum dropped by 20%, which surprised many analysts due to its lack of institutional inflows in the short term and a lack of immediate catalysts to buoy its price. Augustine Fan, head of insights at SignalPlus, noted in a Telegram message that Ethereum has been behaving like an altcoin on the downside, which further fueled concerns about the broader market’s stability.
As the crypto market grapples with these significant losses, traders and analysts alike are closely monitoring the situation, hoping for any signs of recovery or stability. The volatility in the market has led to a cautious outlook as the geopolitical landscape continues to evolve, and investors brace for potential further losses.
