Crypto Market Loses $200 Billion in 24 Hours – Time to Panic?

Cryptocurrency markets have gone into the red. Most major coins, including Bitcoin and  Ethereum , fell by more than 10% over the course of the day. AtoZ Markets found out from experts what happened.

February 23, 2021 | AtoZ Markets – Over the past day, the crypto market has lost more than $200 billion amid a sharp drop in all major currencies.

In 24 hours, the leading cryptocurrency, Bitcoin (BTC) has fallen in price by 13% and went to zero in the last seven days. At the time of this writing, BTC/USD is trading at $47,051 as the total market cap of BTC reached $504 billion.

Cryptocurrency market capitalization. Source Coinmarketcap

Ethereum (ETH) has returned to its lowest levels in the past two weeks. The price of the token fell by more than 22% in a daily ratio and went down under the $1,500 mark. Earlier, AtoZ Markets reported an  abnormal drop in the Ethereum price on the Kraken cryptocurrency exchange to $750. Despite the fact that prices quickly returned to normal, many clients of the exchange suffered losses due to liquidation of positions.

XRP fell 26% to below $0.43 after rising to $0.64 on Monday, February 22 amid news that the startup has registered a company in Wyoming. Preliminary hearings in the SEC case against Ripple have revealed new circumstances of the case, but the official results of the meeting have not yet been announced. In addition, Ripple’s longtime partner MoneyGram has suspended its partnership, citing Ripple’s legal woes.

Traders lick their wounds

A deep drawdown across the entire spectrum of the market led to a massive liquidation of short positions, which, in turn, further increased the selling pressure. According  to the Bybt service, over half a million positions worth almost $5 billion were liquidated in the market over the past 24 hours, while more than 88% of all liquidations were in long positions. Of these, $2.1 billion was liquidated in  BTC and $1.1 billion in positions on ETH.

Data on liquidation of cryptocurrency positions. Source: Bybt

Most liquidations were recorded on Binance (43.3%). The second and third places are occupied by Huobi and OKEx (23.5% and 13.4%, respectively).

Experts advise not to panic

While the market is calculating losses, experts note that such a correction is fully justified in an overheated market. According to Maria Stankevich, director of business development at cryptocurrency exchange EXMO, the market is returning to fair value after a speculative rally driven by celebrity comments.

A few weeks ago, I talked about artificial inflation of the rate: tweets from Musk and Dorsey, publications about large investments in cryptocurrency funds – all this, of course, influenced the frantic growth of the rate, which was not organic. After all large institutional ones have fixed profits, we finally more or less returned to the real value of assets,” said the expert.

According to Maria Stankevich, bitcoin may continue to fall this week, but the upward trend will continue in the medium term.

Tatyana Maksimenko, the official representative of the Garantex crypto exchange, also believes that the exponential growth of bitcoin over the past weeks was caused by the FOMO (fear of missing out) effect. In these conditions, the correction of bitcoin was a matter of time.

Bitcoin managed to surpass very bold forecasts and exceed 50 thousand already in February, although many predicted such a price level only by autumn. And even this milestone did not seem sufficient for bitcoin, it was already very close to 60 thousand. But such an essentially exponential growth cannot be called natural, organic,” said Tatiana Maksimenko.

The news background only fueled the excitement in the market among both retail and institutional investors.

Tesla bought bitcoins, MicroStrategy plans to re-invest in bitcoins, the number of coins on exchange accounts has decreased, people prefer to withdraw and store them in wallets for a long time, which means there is a high risk of a supply shortage.”

All this provoked a powerful speculative rally, which one way or another had to end with a correction, the expert added.

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